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XXVI 

THE  ARBITRAL  DETERMINATION 
OF  RAILWAY  WAGES 


THE 

ARBITRAL  DETERMINATION 

OF  RAILWAY  WAGES 


BY 


J.  NOBLE  STOCKETT,  Jr.,  Ph.D. 


BOSTON  AND  NEW  YORK 
HOUGHTON  MIFFLIN  COMPANY 

^be  mtetmbe  prcjsis  Cambri&gc 

1918 


COPVRIGHT,  I918,  BY  HART,  SCHAFFNIR  &  MARX 
ALL  RIGHTS  RESERVED 

Published  September  IQ18 


PREFACE 


Ht) 


This  series  of  books  owes  its  existence  to  the  gen- 
erosity of  Messrs.  Hart,  Schaffner  &  Marx,  of  Chicago, 
who  have  shown  a  special  interest  in  trying  to  draw 
the  attention  of  American  youth  to  the  study  of  eco- 
nomic and  commercial  subjects.  For  this  purpose  they 
have  delegated  to  the  undersigned  committee  the  task 
of  selecting  or  approving  of  topics,  making  announce- 
ments, and  awarding  prizes  annually  for  those  who 
wish  to  compete. 

For  the  year  ending  June  1,  1916,  there  were  of- 
fered:— 

In  Class  A,  which  included  any  American  without 
restriction,  a  first  prize  of  $1000,  and  a  second  prize  of 
$500. 

In  Class  B,  which  included  any  who  were  at  the  time 
undergraduates  of  an  American  college,  a  first  prize 
of  $300,  and  a  second  prize  of  $200. 

Any  essay  submitted  in  Class  B,  if  deemed  of  suf- 
ficient merit,  could  receive  a  prize  in  Class  A. 

The  present  volume,  submitted  in  Class  A,  was 
awarded  second  prize  in  that  class. 

J.  Laurence  Laughlin,  Chairman, 
University  of  Chicago. 
J.  B.  Clark, 

Columbia  University. 
Henry  C.  Adams, 

University  of  Michigan. 
Edwin  F.  Gay, 

Harvard  University. 
Theodore  E.  Burton, 

New  York  City. 


1384482 


NOTE 

An  obituary  note  must,  sadly  enough,  take 
the  place  of  the  foreword  which  should  have 
prefaced  this  essay.  The  author's  life,  rich  in 
scientific  promise,  was  snuffed  out  at  the  very 
threshold  of  a  scholar's  career,  and  this  bril- 
liant essay  remains  as  the  melancholy  exhibit 
of  what  larger  things  might  hereafter  have 
been  achieved. 

J.  Noble  Stockett,  Jr.,  was  born  in  Balti- 
more, on  February  27,  1889.  He  received  his 
elementary  education  in  the  public  schools  of 
Baltimore,  graduating  from  the  Baltimore 
City  College  in  1907.  He  entered  the  Johns 
Hopkins  University  in  1907  receiving  the 
degree  of  Bachelor  of  Arts  in  1911.  After 
teaching  two  years  at  the  Kent  School,  Kent, 
Connecticut,  he  returned  to  the  Johns  Hop- 
kins University  and  pursued  graduate  studies 
in  Political  Economy  for  three  years.  He  re- 
ceived the  degree  of  Doctor  of  Philosophy  in 
June,  1916,  and  immediately  thereafter  was 
appointed  Instructor  in  Political  Economy 
in  Dartmouth  College.  He  died  at  Hanover, 
New  Hampshire,  on  September  28, 1916. 


CONTENTS 

Introduction xi 

I.  Standardization 1 

II.  The  Living  Wage 54 

III,  The  Increased  Cost  of  Living     ...     77 

IV.  Increased  Productive  Efficiency      .       .  129 

V.  Principles  governing  the  Arbitral  De- 
termination OF  Wages         .      .      .       .168 

Index 195 


INTRODUCTION 

Settlements  of  wage  disputes  by  means  of 
the  accepted  methods  of  maintaining  indus- 
trial peace  —  mediation  or  conciUation,  vol- 
untary and  compulsory  arbitration  —  have 
been  effected  in  the  past  by  appeal  to  ex- 
pediency and  compromise,  rather  than  by  a 
consideration  of  the  merits  of  the  arguments 
presented  by  the  two  parties.  The  frequency 
of  strikes  and  lockouts,  the  recurrence  of 
disputes  followed  by  applications  for  gov- 
ernment mediation  or  arbitration,  and  the 
general  feeling  of  antagonism  still  existing  be- 
tween employers  and  employees,  give  ample 
evidence  that  these  peaceful  methods  do  not 
reach  the  source  of  the  trouble.  Especially  is 
this  true  in  the  case  of  wage  disputes.  In  the 
past,  the  primary  object  of  mediation  and 
arbitration  has  been  the  maintenance  of  the 
processes  of  production  in  continuous  opera- 
tion, and  questions  concerning  wages  have 
been  approached  and  decisions  rendered  with 
this  purpose  in  view.  The  desideratum  has 
been  a  prompt,  speedy  settlement,  and  this 
has  been  attained  at  the  sacrifice  of  a  deter- 
mination based  on  the  merits  of  the  respective 
claims  and  on  some  principle  of  reasonable 


xii  INTRODUCTION 

wage  determination.  The  result  has  been  a 
lessening,  perhaps,  in  the  number  of  strikes 
and  lockouts  and  in  the  interruptions  to  pro- 
duction; but  the  underlying  causes  of  wage 
disputes  remain  unaffected  by  mediation  and 
arbitration  decisions,  and  capable  at  any  time 
of  causing  new  disputes  and  of  arousing  still 
more  unfriendly  relations. 

It  may  be  asked  whether  the  failure  of  these 
methods  of  maintaining  industrial  peace  to 
offer  a  clue  to  the  solution  of  the  wage  prob- 
lem lies  in  any  inherent  fault  in  the  methods 
themselves,  or  in  the  manner  in  which  they 
are  at  present  applied.  From  its  very  nature, 
mediation  can  never  approach  such  a  solu- 
tion. The  mediator's  function  is  to  pla- 
cate the  disputants,  to  harmonize  the  differ- 
ences between  employer  and  the  employee, 
and,  by  winning  concessions  from  both  sides 
through  force  of  personality  and  tact,  to 
effect  an  agreement  acceptable  to  the  parties 
concerned.^  Compromise  is  inevitable.  Medi- 
ation is  not  interested  in  the  justice  of  the 
respective  claims;  the  elements  of  fairness, 
reasonableness,  and  equity  do  not  enter  into 
the  proceedings.^  The  employees  endeavor  to 
obtain  as  great  a  wage  advance  as  possible; 
the  employers,  to  concede  as  little  as  possi- 

1  Bulletin,  U.S.  Bureau  of  Labor,  No.  98,  p.  15. 
^  Ibid.,  p.  15.   See  also  Eastern  Conductors  and  Trainmen's  Ar- 
bitration (1913),  Proceedings,  pp.  1973-1974, 


INTRODUCTION  xiii 

ble;  and  the  mediators,  paring  down  here  and 
adding  on  there,  finally  succeed  in  arranging 
a  voluntary  settlement.  A  mediation  decision 
is  merely  an  adjustment  of  the  dispute, 
rather  than  a  judgment  on  the  merits  of  the 
case;  the  principles  underlying  the  questions 
at  issue  are  ignored,  and  adjudication  of  them 
postponed  for  the  time  being. ^  Arbitration, 
on  the  other  hand,  implies  a  weighing  of  the 
arguments  of  the  respective  sides  by  a  board 
containing  at  least  one  impartial  member,  and 
an  award  representing  a  judgment  upon  the 
merits  of  the  questions  involved.  The  arbi- 
trator's function  partakes  of  a  judicial  na- 
ture; the  decision  rendered  must  be  based 
upon  some  definite,  accepted  principle  of  rea- 
son governing  the  disputed  question.  There 
is  nothing,  therefore,  in  the  method  of  arbi- 
tration to  prevent  the  attainment  of  a  perma- 
nent solution  of  the  wage  problem  —  a  solu- 
tion, in  that  the  underlying  causes  of  the 
wage  dispute  are  met  by  the  application  of  a 
reasonable  principle  of  wages;  and  perma- 
nent, in  that  this  principle  of  wages  is  al- 
ways applicable,  although  changing  external 
conditions  will  necessitate  some  alteration  in 
the  terms  of  the  original  award. 

Arbitration,  as  at  present  practiced,  has 

'  F.  H.  Dixon,  "Public  Regulation  of  Railway  Wages,"  Proceed- 
ings of  American  Economic  Association,  1914,  Vol.  xxvii,  pp.  257- 
259. 


xiv  INTRODUCTION 

little  or  no  judicial  character  except  in  the 
form  of  the  proceedings.  Counsel  for  the  dis- 
putants present  briefs,  witnesses  are  sworn 
and  evidence  introduced,  the  board  adjourns 
to  render  a  decision  which  is  binding  upon 
the  parties;  but  here  the  parallel  ceases.  An 
arbitration  award,  like  a  mediation  agree- 
ment, is  almost  without  exception  a  compro- 
mise decision.  Investigators,  employers,  em- 
ployees, and  arbitrators  themselves  testify  to 
this.  The  Eastern  Engineers'  Board  (1912) 
reported  that  compromise  was  practically 
inevitable  under  the  Erdman  Act.^  Presi- 
dent Garretson,  speaking  for  the  Conductors 
and  Trainmen  in  their  concerted  movement  of 
1913,  stated  that  "every  settlement  that  has 
ever  been  made  by  these  organizations  has 
been  a  compromise  settlement."  ^  In  some 
cases  in  which  the  award  purports  to  be  based 
upon  a  certain  principle  of  wage  advance, 
there  is  a  strong  presumption,  when  a  com- 
parison of  the  original  demands  of  the  em- 
ployees and  of  the  increase  granted  is  made, 
that  after  all  the  award  is  a  simple  compro- 
mise.' 

*  Eastern  Engineers'  Arbitration  (1912),  Report  of  Board,  pp. 
100-101. 

2  Eastern  Conductors  and  Trainmen's  Arbitration  (1913),  Pro- 
ceedings, p.  531. 

^  For  example,  the  switchmen  on  roads  entering  Chicago  re- 
quested a  six-cent  increase  in  1910,  and  received  by  the  arbitra- 
tion award  of  March  22,  1910,  under  tbtt  Erdman  Act,  an  advance 


INTRODUCTION  xv 

There  has  been  almost  universal  condem- 
nation of  the  practice  in  arbitration  of  split- 
ting the  difference  between  the  demands  of 
the  men  and  the  concessions  of  the  employ- 
ers.^ Professor  Adam  Shortt,  who  has  served 
as  chairman  on  numerous  boards  of  concilia- 
tion and  investigation  in  Canada,  refers  to  it 
as  a  "demoralizing  principle,"  ^  and  Judge 
William  L.  Chambers,  United  States  Com- 
missioner of  Mediation  and  Conciliation,  when 
acting  as  chairman  of  the  Eastern  Firemen's 
Board  in  1913,  expressed  the  hope  that  the 

of  three  cents.  The  increase  was  based  on  the  cost  of  living,  which 
the  board  determined  had  advanced  twenty-five  per  cent,  an  equiva- 
lent of  an  eight-cent  increase  in  switchmen's  wages  (Records,  U.S. 
Board  of  Mediation  and  Conciliation,  File  No.  25).  Again,  in  the 
dispute  of  the  telegraphers  with  the  Missouri  Pacific  in  1910  the 
increased  cost  of  living  was  also  given  as  the  basis  of  the  increase. 
There  is  little  doubt,  however,  that  the  award  was  a  compromise, 
for  in  a  letter  to  Judge  M.  A.  Knapp,  dated  July  27,  1910,  the  chair- 
man stated  that  the  men's  representative  had  "...  yielded  finally 
to  my  persuasion  for  a  considerable  concession  below  the  original 
demands  of  the  employees  ..."  and  that  he  was  "...  now  en- 
deavoring to  get  Mr.  Sullivan  [the  road's  representative]  to  join 
in  the  award"  (Records,  U.S.  Board  of  Mediation  and  Concilia- 
tion, File  No.  33).  In  the  Georgia  and  Florida  Arbitration  (1914), 
under  the  Newlands  Act,  the  employees  requested  a  twenty-two 
per  cent  increase  and  received  a  little  over  ten  per  cent.  The  in- 
crease was  based  on  the  desire  of  the  board  to  standardize  the  rates 
on  this  road  with  those  of  other  roads  in  the  vicinity,  the  rates  of 
which  were  foimd  to  be  about  fifteen  per  cent  higher  than  those  on 
the  Georgia  and  Florida  (Georgia  and  Florida  Arbitration  (1914), 
Report  of  Board,  pp.  5,  6,  12). 

1  An  important  exception  is  Mr.  M.  A.  Knapp,  of  the  U.S.  Board 
of  Mediation  and  Conciliation,  who  stated,  in  an  address  before  the 
National  Association  of  Railway  Commissioners,  that  compromise 
was  the  proper  method  in  arbitration  {Railway  Age  Gazette,  Vol.  xlv. 
No.  21,  pp.  1193-1194). 

2  Labour  Gazette  (Canada),  June,  1907,  p.  1410. 


xvi  INTRODUCTION 

award  would  not  be  a  compromise,  but  in  the 
nature  of  a  judgment  or  decree  of  the  court.^ 
The  employees  have  registered  their  disap- 
proval of  compromise  decisions  both  in  the 
course  of  arbitration  proceedings  ^  and  in 
minority  reports  appended  to  the  awards.' 
Employers,  too,  have  emphasized  the  neces- 
sity of  basing  wage  decisions  on  some  prin- 
ciple of  reasonableness  and  fairness.*  In  1913 
the  railways  in  the  Eastern  District  refused 
for  a  considerable  period  to  arbitrate  their 
dispute  with  the  firemen  under  the  provi- 
sions of  the  Erdman  Act,  partly  on  the  ground 
that  the  award  would  of  necessity  be  a  com- 
promise, and  thus  work  to  their  disadvantage.^ 
Their  attitude  was  probably  the  same  as  that 
of  a  recent  investigator  who  stated,  ".  .  .  It 
is  not  absolutely  certain  but  that  in  excep- 
tional cases  a  strike  or  lockout  is  a  more 
wholesome  culmination  of  an  aggravated  dis- 
pute than  a  series  of  temporizing  and  un- 
satisfactory compromises."  ^ 

^  Eastern  Firemen's  Arbitration  (1913),  Proceedings,  p.  2492. 

*  Ibid.,  Proceedings,  p.  2375. 

'  Eastern  Engineers'  Arbitration  (1912),  Report  of  Board,  p. 
Ill;  Eastern  Conductors  and  Trainmen's  Arbitration  (1913),  Re- 
port of  Board,  p.  58. 

*  Ibid.,  Proceedings,  p.  2056;  Chicago  and  Western  Indiana  Rail- 
way and  Belt  Railway  Co.  Arbitration  (1913),  Proceedings,  Vol. 
n,  pp.  1341-1342. 

*  Eastern  Firemen's  Arbitration  (1913),  Supplementary  Report 
of  the  International  President,  Concerted  Movement  (1913),  p.  38. 

*  Victor  S.  Clark,  "Canadian  Industrial  Disputes  Investigation 
Act  of  1907,"  Bulletin,  U.S.  Bureau  of  Labor,  No.  86,  p.  3. 


INTRODUCTION  xvii 

The  justification  for  these  opinions  be- 
comes apparent  when  the  effects  of  decisions 
based  on  compromise  are  considered.  In  the 
first  place,  employees  are  encouraged  to  make 
frequent  demands  for  wage  increases,  since 
they  are  practically  certain  that  at  least  a 
part  of  their  requests  will  be  granted.  The 
demands  made,  also,  are  generally  far  in  ex- 
cess of  what  can  be  supported  on  reasonable 
grounds;  and  naturally  so,  because  the  em- 
ployees, knowing  in  advance  that  their  re- 
quests will  be  cut  in  half,  make  their  demands 
double  the  amount  which  they  really  expect 
to  receive.^  The  employers,  on  the  other 
hand,  knowing  the  usual  outcome  of  disputes 
submitted  to  arbitration,  generally  agree  to 
arbitrate  only  as  a  last  resort,  and  then  are 
determined  to  concede  the  minimum  amounts 
although  they  may  be  convinced  of  the  jus- 
tice of  the  employees'  claim  to  a  certain  in- 
crease in  wages.  The  frequency  and  extrav- 
agance of  the  employees'  demands  serve  to 
increase  the  danger  of  an  open  breach  in  the 
relations  of  the  two  parties  with  consequent 
interruption  to  the  processes  of  production 
and  injury  to  the  public.  Compromise  deci- 
sions also  render  the  expenditures  of  both 
sides,  for  the  collection  of  data  and  the  pay- 

^  Eastern  Engineers'  Arbitration  (1912),  Report  of  Board,  p. 
101;  Eastern  Conductors  and  Trainmen's  Arbitration  (1913),  Pro- 
ceedings, p.  2056;  Bulletin,  U.S.  Bureau  of  Labor,  No.  98,  p.  176. 


xviii  INTRODUCTION 

ment  of  statistical  experts  for  the  prepara- 
tion of  exhibits  illustrating  the  principles 
underlying  their  agreements,  a  useless  extrav- 
agance and  waste.  If  the  arbitrator  in  order 
to  reach  a  decision  has  simply  to  divide  the 
difference  between  the  maximum  demands  of 
the  men  and  the  minimum  concessions  of  the 
employer  by  two,  he  will  scarcely  need  thou- 
sands of  pages  of  statistical  tables,  diagrams, 
and  evidence  of  witnesses  showing  the  rise  in 
the  cost  of  living,  the  increase  in  productive 
efficiency,  and  the  effect  of  various  mechanical 
appliances. 

The  most  serious  count  against  a  compro- 
mise award,  however,  is  its  unjust  character. 
It  is  not  based  upon  any  adequate  investiga- 
tion of  the  facts  nor  upon  any  inquiry  into  the 
relative  merits  of  the  arguments  presented 
by  the  two  sides  in  support  of  their  claims. 
No  attempt  is  made  to  determine  whether 
the  employees  are  justified  in  requesting  an 
increase  or  the  employers  in  refusing  to  agree 
to  an  advance  in  wages.  Such  a  decision 
effects  no  real  settlement,  for  if  a  reason  for 
a  certain  increase  in  wages  existed  in  the 
first  instance,  the  same  reason  exists  after  a 
part  of  the  proper  increase  has  been  granted.^ 
The  adjustment  settles  nothing  definitely;  it 

1  Eastern  Conductors  and  Trainmen's  Arbitration  (1913),  Pro- 
ceedings, p.  531. 


INTRODUCTION  xix 

merely  postpones  further  action  on  the  prin- 
ciple involved  until  after  the  expiration  of  the 
time  limit  set  in  the  award.  Both  employers 
and  employees  feel  that  they  have  been  un- 
justly dealt  with,  and  return  to  work,  hostile 
to  each  other  and  disinclined  to  refer  further 
disputes  to  peaceful  settlement.  The  piling- 
up  of  compromise  on  compromise  results 
in  a  haphazard,  unscientific  wage  system  un- 
satisfactory to  all  concerned;  for  the  em- 
ployer is  paying  a  certain  wage  without  any 
knowledge  of  why  he  is  paying  that  amount 
except  that  he  is  obliged  to,  and  the  employee 
is  receiving  his  wage,  although  certain  that  he 
is  worth  more,  but  unable  to  force  a  larger 
amount  from  his  employer. 

In  the  preceding  paragraphs  an  attempt 
has  been  made  to  show  that  the  possibilities 
of  arbitration  have  not  been  realized  on  ac- 
count of  the  use  of  the  principle  of  compromise 
in  arriving  at  wage  awards;  that  this  prin- 
ciple is  almost  universally  condemned;  and 
that  this  condemnation  is  justified  by  a  con- 
sideration of  the  evil  effects  of  compromises 
in  arbitration  proceedings.  If  this  attempt 
has  been  successful,  it  is  evident  that  the 
method  of  adjustment  by  compromise  must 
be  abandoned,  either  by  some  organic  change 
in  arbitration  laws  or  by  some  alteration  in 
the  method  of  their  application. 


XX  INTRODUCTION 

The  seeming  inevitableness  of  compromise 
decisions  has  been  ascribed  to  various  causes 
—  the  short  period  of  time  within  which  the 
arbitrators  must  render  a  decision,  the  heavy 
responsibihty  placed  upon  the  single  neutral 
arbitrator,  the  ignorance  of  the  impartial 
member  of  the  board  concerning  the  details 
of  the  industry  involved,  and  so  on.  The 
fault  lies,  however,  not  so  much  with  the 
specific  details  of  the  various  laws,  as  with 
the  lack  of  some  definite,  fundamental  prin- 
ciples to  which  arbitrators  may  turn  as  bases 
for  their  wage  decisions.  The  first  question 
which  arises  in  an  arbitrator's  mind  is :  What 
is  the  fair  wage  for  this  particular  kind  of 
work,  or  what  are  the  just  and  reasonable 
grounds  for  an  increase  in  the  wages  of  this 
class  of  employees?  If  there  existed  some 
generally  accepted  principle  of  a  fair  and 
reasonable  wage  and  some  definite  basis  of 
wage  advance,  the  task  of  the  arbitrator 
would  be  much  lightened,  for  he  would  be 
able  to  apply  these  general  principles  to  the 
particular  facts  in  the  dispute  and  arrive  at 
an  equitable  decision.  This  urgent  need  has 
undoubtedly  been  brought  home  to  every 
one  who  has  had  any  experience  in  arbitra- 
tion proceedings.  The  writer  of  a  recent  arti- 
cle on  the  Australian  industrial  courts  stated 
that  one  could  not  help  being  impressed  with 


INTRODUCTION  xxi 

the  bewildered  search  of  the  courts  for  guid- 
ing principles.^  The  statement  of  the  Eastern 
Engineers'  Board  (1912)  is  fairly,  typical  of 
the  conclusions  reached  by  all  wage  boards: 
"Possibly  there  should  be  some  theoretical 
relation,  for  a  given  branch  of  industry,  be- 
tween the  amount  of  the  income  that  should 
go  to  labor  and  the  amount  that  should  go  to 
capital;  and  if  this  question  were  decided,  a 
scale  of  wages  might  be  devised,  for  the  dif- 
ferent classes  of  employees,  which  would  de- 
termine the  amount  rightly  absorbed  by  la- 
bor. It  may  be  that  in  the  future  some  such 
solution  will  be  worked  out  for  the  various 
industries;  and  if  so,  the  income  of  the  rail- 
roads could  be  so  apportioned.  Thus  far,  how- 
ever, political  economy  is  unable  to  furnish 
such  a  principle  as  suggested.  There  is  no 
generally  accepted  theory  of  the  division  of 
income  between  capital  and  labor."  ^ 

It  is  true  that  the  study  of  economics  has 
not  resulted  in  an  accepted  solution  of  the 
wage  problem;  some  economists  have  gone 
so  far  as  to  state  that  the  determination  of 
a  fair  and  equitable  wage  is  an  impossibility. 
One  who  has  had  wide  experience  in  the  set- 
tlement of  railway  disputes  in  the  United 

^  G.  A.  Beeby,  "  Artificial  Regulation  of  Wages  in  Australia," 
Economic  Journal,  Vol.  xxv.  No.  99,  p.  323. 

2  Eastern  Engineers'  Arbitration  (1912),  Report  of  Board,  p. 
47. 


xxii  INTRODUCTION 

States  is  authority  for  the  assertion  that 
there  is  no  right  or  wrong  about  wages.  ^  In 
an  address  before  the  American  Economic 
Association,  Dr.  F.  H.  Dixon  said:  "As  a 
matter  of  fact  the  situation  is  hopeless,  and 
will  remain  so,  as  long  as  we  delude  ourselves 
into  thinking  that  we  can  under  present  eco- 
nomic conditions  find  a  basis  for  wages  in  any 
theory  of  ultimate  reasonableness.  It  may 
be  that  we  are  not  merely  chasing  a  will-of- 
the-wisp  when  we  are  hunting  for  a  reason- 
able wage,  but  we  are  at  any  rate  seeking  the 
unattainable."  ^ 

The  situation  may  be  hopeless,  but  arbi- 
tration, without  the  application  of  some  gen- 
erally accepted  principle  of  wages  in  the 
awards,  will  continue  to  be  a  mere  com- 
promise method,  accompanied  by  manifold 
evils  and  incapable  of  effecting  an  equitable 
settlement  of  any  wage  dispute.  If  it  be 
agreed  that  the  determination  of  principles 
of  fair  wages  and  of  wage  advance  will  aid 
in  securing  better  results  in  arbitration  pro- 
cedure, search  for  a  principle  of  fair  and  rea- 
sonable wages  may  not  be  abandoned.  Final 
solution  of  the  wages  problem  may  never  be 
reached;  but  continuous  and  energetic  effort 
must  be  directed  toward  a  nearer  approach 

*  Railway  Age  Gazette,  Vol.  xlv,  No.  21,  pp.  1193-1194. 

*  Proceedings  of  the  AmericaD  Economic  Association,  1914,  Vol. 
xxvu,  pp.  264-265. 


INTRODUCTION  xxiii 

to  a  reasonable  and  just  division  between  em- 
ployer and  employee. 

It  is  the  purpose  of  the  following  chapters 
to  present  a  study  of  the  principles  of  wage 
determination  and  of  wage  increase  advanced 
by  the  employees  and  employers  in  the  course 
of  arbitration  proceedings.  The  contentions 
of  these  two  parties  are  likely  to  show  ex- 
treme bias,  but  it  is  to  be  expected  that  their 
arguments,  tempered  by  the  findings  and 
reasoning  of  arbitration  boards,  will  suggest 
some  fundamental  principles  which  may  serve 
as  the  basis  of  a  fair  and  reasonable  wage  or  of 
a  just  principle  of  wage  increase.  There  is 
no  richer  field  for  such  a  study  than  the  dis- 
putes settled  by  arbitration  under  the  Erd- 
man  ^  and  Newlands  ^  Acts  in  the  United 
States  and  by  the  boards  of  conciliation  and 
investigation  appointed  under  the  Canadian 
Industrial  Disputes  Investigation  Act.^  Since 
the  first-named  laws  apply  only  to  railways, 
all  those  disputes  involving  other  industries 
which  have  been  settled  under  the  Canadian 
statute  have  been  omitted  in  this  study. 

Thirteen  arbitrations  have  been  conducted 
under  the  provisions  of  the  Erdman  Act  dur- 

»  U.S.  Statutes  at  Large,  Vol.  xxx,  pp.  424-428. 

*  Ibid.,  Vol.  XXXVIII,  Part  i,  pp.  103-108. 

*  6-7  Edward  VII,  c.  20.  For  text  and  amendments  see  Eighth 
Report,  Registrar  of  Boards  of  Conciliation  and  Investigation 
^Canada),  1915,  pp.  321-354. 


xxiv  INTRODUCTION 

ing  the  fifteen  years  in  which  it  was  in  force; 
seven  under  the  Newlands  Act  up  to  June  30, 
1914;  and  forty-five  railway  disputes  in- 
volving wages  under  the  Industrial  Disputes 
Investigation  Act  from  March,  1907  to  June, 
1915.  In  addition  to  these  sixty-five  cases, 
two  others,  the  Eastern  Engineers'  Arbitra- 
tion of  1912  conducted  by  special  agreement 
between  the  employees  and  the  railways,  and 
the  Western  Engineers  and  Firemen's  Arbi- 
tration of  1915,  were  included  in  the  material 
used.  The  briefs,  exhibits,  and  evidence  of 
witnesses  of  the  employees  and  employers, 
so  far  as  such  material  was  available,  have 
been  examined  with  a  view  to  ascertaining  the 
content  of  each  principle  advanced  and  the 
grounds  upon  which  it  is  supported.  The 
findings  of  the  arbitration  boards  are  then 
discussed,  and  an  appraisal  made  of  the  opin- 
ions of  the  parties  to  the  controversy  in  the 
hope  of  forming  a  judgment  as  to  the  rea- 
sonableness and  fairness  of  the  proposed 
principles  of  wages. 

In  these  arbitration  proceedings,  four 
broad,  general  principles  have  been  advanced 
as  bases  for  wage  determination  —  Stand- 
ardization, the  Living  Wage,  Increased  Cost 
of  Living,  and  Increased  Productive  Effi- 
ciency. These  constitute  the  subjects  of  four 
chapters.  The  final  chapter  attempts  to  clear 


INTRODUCTION  xxv 

up  inconsistencies  and  to  merge  the  conclu- 
sions of  the  preceding  chapters  into  a  homo- 
geneous system.  Of  necessity,  the  result  of 
such  an  attempt  must  be  fragmentary  and 
inconclusive;  but  the  justification  for  the 
endeavor  lies  in  the  manifest  need  of  some 
fundamental  principles  of  wages  which  may 
be  applied  in  arbitration  proceedings. 


THE  ARBITRAL  DETERMINATION 
OF  RAILWAY  WAGES 

CHAPTER  I 

STANDARDIZATION 

The  standardization  of  railway  wages  — 
the  uniform  application  of  a  standard  rate  of 
pay  for  a  given  grade  of  employment  within 
a  certain  area  —  has  been  the  principle  most 
stubbornly  maintained  by  the  railway  em- 
ployees and  the  one  which  has  been  most  in- 
fluential in  determining  the  present  form  of 
railway  wage  bargaining.  The  object  of  the 
standardization  movement  is  to  secure  uni- 
formity of  compensation  for  similar  service 
throughout  a  given  area.  This  principle, 
therefore,  is  most  conveniently  treated  under 
three  headings  according  to  the  area  in  which 
the  standard  rate  is  to  apply.  The  following 
sections  deal  successively  with  (I)  System 
Standardization,  (II)  District  Standardiza- 
tion, and  (III)  National  Standardization. 

I.  System  Standardization 

System  standardization  implies  the  applica- 
tion of  a  standard  rate  to  a  single  road  or  to 
a  number  of  roads  combined  into  one  system. 


2    DETERMINATION  OF  RAILWAY  WAGES 

The  advocacy  of  the  principle  of  system 
standardization  grew  out  of  the  desire  of  the 
employees  to  abolish  individual  bargaining. 
Under  this  method,  railway  officials  paid  ap- 
plicants for  positions  according  to  their  esti- 
mate of  the  labor  and  skill  involved  in  operat- 
ing a  train  upon  a  certain  run  or  division. 
Thus,  employees  received  one  rate  for  main 
line  service,  another  for  branch  line,  another 
for  a  run  through  particularly  hilly  country, 
and  still  another  for  a  route  upon  which  traf- 
fic was  especially  heavy.  In  course  of  time  a 
wage  system  was  built  up  consisting  of  a  mul- 
titude of  diverse  rates.  This  condition  the 
employees  regarded  as  intolerable,  for  the 
reason  that  men  of  a  certain  grade  of  em- 
ployment and  in  the  same  service  found  them- 
selves in  many  cases  receiving  rates  far  be- 
low those  obtained  by  fellow  workmen  of  the 
same  grade  and  in  the  same  service  who 
chanced  to  be  working  on  a  different  run  or 
division.  Out  of  this  grew  the  demand  for  a 
standard  rate  for  a  given  grade  of  employ- 
ment in  a  certain  service.  This  insures  that  an 
employee  will  receive  as  much  for  his  effort 
and  skill  as  any  other  workman  of  the  same 
grade  performing  similar  service,  whether  the 
work  be  done  in  the  same  locality  or  on  an- 
other part  of  the  road  or  system.  Under  sys- 
tem standardization,  the  multiplicity  of  rates 


STANDARDIZATION  3 

resulting  from  individual  bargaining  is  abol- 
ished, and  all  employees  who  formerly  were 
paid  lower  rates  of  pay  receive  at  least  the 
amount  set  as  the  standard. 

The  standard  rate  so  set  applies  uniformly 
to  all  employees  of  a  given  grade  in  the  same 
class  of  service,  regardless  of  varying  physical 
and  traffic  conditions  on  different  parts  of  the 
same  road.  Thus  no  difference  is  to  be  made  in 
the  rate  of  compensation  between  main-  and 
branch-line  service,  or  between  service  on  a 
single-track  division  with  numerous  curves 
and  grade  changes  and  a  run  on  a  level,  four- 
track  route.  The  employees  claim  that  class- 
ification of  runs  on  the  basis  of  varying  traffic 
and  physical  conditions  does  not  take  ac- 
count in  full  degree  of  differences  in  efficiency 
required,  and  in  the  labor  and  responsibility 
involved  in  the  various  classes  of  service.  The 
standardization  requested  by  the  employees 
by  no  means  implies  a  single  rate  for  all  kinds 
of  service;  provision  is  made  for  the  classi- 
fication of  service  and  the  establishment  of  a 
separate  rate  for  each,  and  also,  in  the  case  of 
certain  grades  of  employment,  for  a  sub-classi- 
fication of  service  according  to  some  criterion 
which  will  insure  greater  pay  where  greater 
labor  and  responsibility  are  involved. 

The  form  of  standardization  proposed  by 
the  employees  is  well  illustrated  by  the  re- 


4    DETERMINATION  OF  RAILWAY  WAGES 

quests  submitted  in  the  Eastern  Engineers' 
Arbitration  of  1912.  Railroad  service  was  clas- 
sified into  passenger,  through  freight,  —  in- 
cluding mine,  work,  wreck,  pusher  or  helper, 
milk,  roustabout,  and  circus  service,  —  local 
freight,  switching,  and  belt  line.  Instead  of  five 
rates  for  these  services,  sub-classification  re- 
sulted in  a  total  of  twelve  rates.  For  instance, 
in  through  freight  service,  engineers  operat- 
ing locomotives  with  a  cylinder  diameter  of 
twenty  inches  or  less  were  to  receive  $5.25  per 
one  hundred  miles  or  less,  ten  hours  or  less; 
from  twenty  to  twenty-four  inches  or  over, 
excepting  Mallets,  $5.75;  and  Mallet  type  of 
engines,  $7.^  In  the  recent  concerted  move- 
ment by  the  engineers  and  firemen  in  the 
West,  weight  on  drivers,  instead  of  cylinder 
diameter,  was  urged  as  the  proper  criterion 
of  sub-classification,  on  the  ground  that  driver 
weight  was  a  more  accurate  index  of  tractive 
power  than  cylinder  diameter,  and,  therefore, 
more  exactly  reflected  differences  in  eflBciency, 
labor,  and  responsibility  resulting  from  the 
operation  of  larger  locomotives.^  The  conduc- 
tors and  trainmen  make  no  attempt  to  estab- 
lish a  graduated  standard,  contenting  them- 
selves with  a  simple  classification  of  service. 

'  Eastern  Engineers'  Arbitration  (1912),  Report  of  Board, 
pp.  6-7. 

^  Western  Engineers  and  Firemen's  Arbitration  (1915),  Em- 
ployees' Brief,  pp.  14-15. 


STANDARDIZATION  5 

In  the  application  of  system  standardiza- 
tion to  the  employees  in  a  certain  grade  of 
employment,  the  men  naturally  desire  the 
removal  of  low  spots  in  the  wage  schedule 
without  a  corresponding  decrease  in  the  rates 
of  those  already  receiving  above  the  stand- 
ard. This  is  accomplished  by  the  insertion  in 
their  demands  of  a  so-called  "saving  clause," 
an  article  providing  that  existing  rates  of  pay 
that  are  more  favorable  to  the  employees 
than  those  proposed  in  the  new  schedule  shall 
be  retained.  The  men  usually  attempt  to 
secure  the  incorporation  of  this  clause  in  the 
agreement  to  arbitrate,  and  have  come  to 
regard  it  as  so  well  established  and  long  ac- 
cepted that  it  should  be  included  without 
question.^  The  employees  base  their  claims 
for  the  saving  clause  on  precedent  ^  and  on 
their  restraint  in  not  demanding  the  highest 

1  In  a  preliminary  meeting  held  prior  to  the  Eastern  Conductors 
and  Trainmen's  Arbitration  in  1913,  the  roads  attempted  to  secure 
the  adoption  of  an  article  providing  that  the  rates  and  rules  awarded 
in  the  coming  proceedings  should  supersede  rates  and  rules  then 
in  effect  which  were  in  conflict  therewith.  This  attempt  to  render 
the  saving  clause  inoperative  was  firmly  and  successfully  resisted 
by  the  representatives  of  the  employees.  In  the  arbitration  pro- 
ceedings, when  the  question  of  the  saving  clause  came  up,  the  em- 
ployees' arbitrators  refused  to  vote  on  the  ground  that  there  had 
been  an  understanding  with  the  government  mediators  that  the 
saving  clause  articles  were  not  to  be  submitted  to  arbitration.  See 
Quarterly  Journal  of  Economics,  February,  1914,  p.  365;  Eastern 
Conductors  and  Trainmen's  Arbitration  (1913),  Report  of  Board, 
pp.  32-33,  59. 

2  Eastern  Engineers'  Arbitration  (1912),  Employees'  Brief,  p.  43. 


6    DETERMINATION  OF  RAILWAY  WAGES 

rates  in  existence  as  the  standard  rate.^  It  is 
further  maintained  that  the  high  rates  should 
be  retained,  for  their  existence  is  a  result  of  a 
low  rate  or  some  other  concession  elsewhere, 
and  it  would  be  manifestly  unfair  to  remove 
an  advantage  gained  in  this  manner.^  The 
employees  assert,  too,  that  there  is  nothing  in 
the  saving  clause  incompatible  with  the  theory 
of  the  standard  rate,  for  a  standard  is  a  rate 
below  which  the  employer  must  not  pay  any 
of  his  men,  but  above  which  he  is  expected  to 
compensate  those  men,  who,  on  account  of 
greater  eflSciency,  deserve  payment  above  the 
standard.^ 

In  reply  to  the  demands  of  the  employees 
for  the  establishment  of  system  standardiza- 
tion, the  railways  contend  that  the  standard, 
being  a  uniform  rate  applicable  to  all  the  em- 
ployees of  a  given  grade,  can  be  applied  only 
where  uniform  conditions  exist.*  Physical  and 
traffic  conditions  cannot  possibly  be  made 
uniform,  and  therefore  it  is  unfair  to  the  men 
to  attempt  the  application  of  a  standard  rate. 
The  railways  hold  that  the  differences  be- 

^  Western  Engineers  and  Firemen's  Arbitration  (1915),  Em- 
ployees' Brief,  pp.  3-4. 

^  Eastern  Engineers'  Arbitration  (1912),  Employees'  Brief,  p.  44. 

*  Ibid.,  p.  45;  Western  Engineers  and  Firemen's  Arbitration  (1915), 
Employees'  Brief,  p.  4. 

*  Eastern  Firemen's  Arbitration  (1913),  Railways'  Brief,  p.  15; 
Chicago,  Biu-lington  and  Quincy  Arbitration  (1914),  Proceedings, 
pp.  9576-9577. 


STANDARDIZATION  7 

tween  main  and  branch  lines,  between  moun- 
tainous and  level  grades,  routes  with  heavy 
and  light  traffic,  etc.,  should  be  reflected  in 
the  wages  received  by  those  working  under 
these  varying  conditions.^  A  single  rate,  ap- 
plicable to  all  employees  of  one  grade,  regard- 
less of  the  local  conditions  affecting  their 
service,  would  clearly  work  to  the  men's  dis- 
advantage. ^ 

The  railways  assert,  also,  that  the  stand- 
ard, because  it  is  a  uniform  rate,  is  "subject 
to  the  criticism  that  it  fails  to  distinguish  effi- 
ciency from  inefficiency,  takes  away  from  the 
employee  the  incentive  to  exert  himself  be- 
yond the  unavoidable  minimum,  and  thus 
stifles  competition  of  labor  with  labor,  greatly 
increasing  the  cost  of  production."  ^  The 
saving  clause,  however,  which  aims  to  retain 
rates  higher  than  the  standard  and  tends  to 
lessen  the  uniformity  so  vehemently  criti- 
cized by  the  railways,  is  strongly  condemned 
on  the  ground  that  it  is  inconsistent  with  the 

^  Eastern  Engineers'  Arbitration  (1912),  Railways'  Brief,  p.  25. 

^  For  a  detailed  account  of  the  objections  to  standardization,  see 
Cunningham,  "Standardizing  the  Wages  of  Railroad  Trainmen," 
Quarterly  Journal  of  Economics,  November,  1910,  pp.  139-160.  The 
railways  have  also  objected  to  the  standard  rate  on  account  of  the 
difficulty  of  its  application.  Since  these  difficulties  are  peculiar  to 
railway  service,  and  do  not  affect  the  principle  of  the  standard,  the 
consideration  of  them  is  omitted  in  this  paper.  See  Eastern  Fire- 
men's Arbitration  (1913),  Railways'  Brief,  pp.  13-14;  Eastern 
Conductors  and  Trainmen's  Arbitration  (1913),  Railways'  Brief, 
pp.  11-12. 

*  Eastern  Engineers'  Arbitration  (1912),  Railways'  Brief,  p.  13. 


8    DETERMINATION  OF  RAILWAY  WAGES 

plea  for  uniformity.  The  roads  claim  that 
the  establishment  of  a  standard  implies 
the  *' equalization  of  dissimilar  rates";  ^  and 
therefore,  if  the  low  rates  in  the  wage  sched- 
ule are  raised  to  the  standard,  then  similarly 
the  high  rates  should  be  lowered.  Since  the 
saving  clause'  permits  the  raising  of  the  low 
rates  without  a  lowering  of  the  high  rate,  it 
prohibits  any  equalization  of  dissimilar  rates 
and  defeats  the  uniformity  desired  by  the 
employees.^  In  other  words,  the  railways 
condemn  a  standard  rate  because  they  con- 
sider it  to  be  a  single  uniform  wage,  and  then 
they  condemn  a  provision  which  tends  to  les- 
sen uniformity  by  retaining  certain  payments 
above  the  standard.  A  more  convincing  argu- 
ment against  the  saving  clause  is  found  in  the 
assertion  of  the  railways  that  it  insures  the 
employees  against  any  loss  in  a  wage  dis- 
pute, and  therefore,  by  encouraging  numer- 
ous and  excessive  demands  for  increases, 
fosters  agitation  and  strife.^ 

American    arbitration  boards    have   been 

*  Western  Engineers  and  Firemen's  Arbitration  (1915),  Report 
of  Board,  p.  26. 

2  Eastern  Engineers'  Arbitration  (1912),  Railways'  Brief,  pp. 
13-15;  Eastern  Firemen's  Arbitration  (1913),  Railways'  Brief, 
pp.  3,  56,  Proceedings,  p.  2473;  Eastern  Conductors  and  Train- 
men's Arbitration  (1913),  Railways'  Brief,  pp.  47-48;  Proceedings, 
p.  2009. 

*  Eastern  Firemen's  Arbitration  (1913),  Railways'  Brief,  p.  56; 
Eastern  Conductors  and  Trainmen's  Arbitration  (1913),  Rail- 
Ways'  Brief,  p.  48. 


STANDARDIZATION  9 

practically  unanimous  in  their  approval  of  the 
principle  of  system  standardization.  In  all 
the  large  concerted  movements  and  in  dis- 
putes involving  only  one  road,  the  service 
classifications  suggested  by  the  employees 
have,  with  few  exceptions,  been  adopted  and 
at  least  one  standard  rate  applied  to  each 
class  of  service.  In  this  manner  most  of  the 
complicated  differences  in  rates  of  compensa- 
tion for  similar  service  have  been  removed, 
the  boards  evidently  recognizing  the  disad- 
vantages attending  a  wide  diversity  of  rates. 
It  is  impossible  to  say,  however,  whether  the 
establishment  of  the  standard  rates  was 
prompted  more  by  the  superior  weight  of  the 
employees'  arguments  than  by  the  inability 
of  the  boards  to  determine  the  rate  commen- 
surate with  the  labor  involved  on  each  par- 
ticular run.  Thus,  although  the  Eastern  En- 
gineers' Board  of  1912  held  that  "...  local 
variations  in  the  character  of  the  service 
should  be  reflected,  to  a  reasonable  extent, 
in  the  rates  of  pay,  ..."  and  that  there  was 
no  warrant  for  imposing  one  rate  without 
regard  to  local  differences  on  the  same  road, 
it  found  itself  unable  " .  .  .to  adjust  the  com- 
pensation for  each  class  of  service  and  each 
kind  of  engine  for  each  of  the  roads  .  .  .  ,"^  and 

'  Eastern  Engineers'  Arbitration  (1912),  Report  of  Board,  pp. 
23-24,  77-78. 


10    DETERMINATION  OF  RAILWAY  WAGES 

awarded  a  single  standard  rate  for  the  various 
classes  of  service.  It  may  be  said  that  the  at- 
titude of  the  boards  is  a  recognition  of  the 
fact  that  a  multiplicity  of  rates  may  become  a 
hardship  to  a  number  of  employees,  and  there- 
fore, as  far  as  possible,  a  standard  has  been 
awarded.  They  have  refused,  however,  to 
commit  themselves  by  definite  statement  to 
the  principle  that,  regardless  of  varying  phys- 
ical and  traffic  conditions  on  the  same  road, 
a  standard  rate  should  be  applied  uniformly 
to  all  the  employees  of  a  given  grade  in  a  given 
service. 

In  regard  to  the  form  of  the  standard  rate, 
most  of  the  boards  in  those  cases  involving 
engineers  and  firemen  have  established  the 
graduated  standard,  —  the  criterion,  as  a  rule 
being  weight  on  drivers.  The  Eastern  En- 
gineers' Award  of  1912,  in  which  no  gradu- 
ated standard  was  granted,  is  an  exception. 
The  recognition  of  the  demands  of  the  em- 
ployees in  this  respect  may  be  regarded  as  an 
attempt  to  provide  for  a  definite  payment 
above  the  standard  to  compensate  for  greater 
efiiciency,  labor,  or  responsibility.  The  eco- 
nomic handling  of  a  large  locomotive  re- 
quires more  efficiency  in  firing  and  in  opera- 
tion than  is  necessary  in  the  case  of  a  small 
one,  and  the  increased  length  of  the  train 
hauled  places  more  responsibility  upon  the 


STANDARDIZATION  11 

crew.  Without  a  graduated  standard,  it  is 
likely  that  the  railways  would  make  little  dif- 
ference in  compensation  above  the  standard 
according  to  the  efficiency,  labor,  and  re- 
sponsibility involved  in  the  operation  of 
larger  locomotives.  The  boards,  therefore, 
have  awarded  the  graduated  rate  in  order  to 
counteract  this  unmistakable  tendency. 

The  boards  have  dissented  with  one  voice 
from  the  position  of  the  railways  that  the 
standard  rate  should  be  established  by  an  in- 
crease in  the  low  rates  in  the  schedules  and  a 
corresponding  decrease  in  the  high  rates.  In 
granting  the  saving  clause,  recognition  has 
been  given  to  the  employees'  claim  that  the 
standard  rate  is  a  minimum  only  and  never  a 
maximum  and  that  there  is  nothing  to  prevent 
the  roads  from  paying  wages  above  the  stand- 
ard. It  is  recognized  that  standardization  is 
always  an  upward  movement,  accomplished 
by  increasing  lower  rates  to  an  ever  rising 
standard,  those  rates  higher  than  the  standard 
being  retained.  In  the  past,  however,  the 
privileges  of  the  saving  clause  have  been 
abused  at  times  by  a  combination  of  the 
newly  awarded  provisions  with  the  more 
favorable  existing  conditions,  resulting  in  a 
still  further  increase  of  some  of  the  high  rates. 
Several  of  the  boards  have  endeavored,  there- 
fore, to  define  the  meaning  of  the  saving 


12    DETERMINATION  OF  RAILWAY  WAGES 

clause  more  clearly.  The  Eastern  Firemen's 
Board  of  1913,  for  instance,  compelled  the 
employees  to  accept  the  amended  rates  and 
conditions,  or  to  retain  the  old  rates  and  con- 
ditions; and  the  Eastern  Conductors  and 
Trainmen's  Award  of  the  same  year  provided 
that  the  earnings  of  the  employees  concerned 
should  not  be  diminished  by  the  terms  of  the 
award,  but  also  that  earnings  should  not 
*'.  .  .  be  increased  above  what  the  higher  rates 
of  pay  and  the  conditions  that  were  better 
antecedent  hereto  guaranteed  them,  by  a 
combination  of  the  rates  herein  established 
with  the  conditions  antecedent  hereto  or 
vice  versa.''  ^ 

II.  District  Standardization 
District  standardization  is  the  application 
of  a  standard  rate  uniformly  to  all  railways 
within  a  certain  district.  The  desire  for  the 
general  application  of  this  principle  arose 
from  the  wide  diversity  of  rates  and  working 
conditions  which  existed  on  different  roads 
throughout  the  United  States.  Negotiations 
between  official  representatives  of  each  rail- 
road and  committees  representing  the  em- 
ployees of  that  road  might  result  in  system 
standardization,  but  collective  bargaining  on 

'  Eastern  Conductors  and  Trainmen's  Arbitration  (1913),  Re- 
port of  Board,  p.  53. 


STANDARDIZATION  13 

this  scale  could  not  abolish  the  wide  differ- 
ences in  rates  between  the  various  roads 
within  the  district.  Strength  of  organization, 
large  membership  and  aggressive  methods, 
combined  with  a  measure  of  liberality  on  the 
part  of  employing  officials  served  to  give  em- 
ployees on  many  roads  higher  wages  and 
more  favorable  working  conditions  than  those 
on  other  roads  where  wage  bargaining  was  not 
carried  on  under  these  conditions.^  The  nat- 
ural result  of  this  system  of  bargaining  was  a 
great  diversity  in  railway  wage  rates  through- 
out the  United  States.  Some  roads  recog- 
nized only  two  types  of  service,  passenger 
and  freight;  others  sub-classified  freight  serv- 
ice into  local  and  through  freight;  some  in- 
cluded switching  service  as  a  separate  cate- 
gory. Again,  roads  adopted  various  bases  of 
pay,  by  mileage,  trip,  day,  or  month.  En- 
gineers were  usually  paid  according  to  the 
size  of  the  locomotive  operated;  but  even 
here  no  uniformity  prevailed,  for  compen- 
sation varied  according  to  several  criteria, 
total  weight,  weight  on  drivers,  or  diameter 
of  cylinder. 

The  railway  employees  sought  to  end  this 
chaotic  condition  of  affairs  by  extending  the 

^  Western  Engineers  and  Firemen's  Arbitration  (1915),  Em- 
ployees' Brief,  p.  2;  Eastern  Firemen's  Arbitration  (1913);  Sup- 
plemental Report,  International  President,  Concerted  Movement 
(1913),  Employees'  Brief,  pp.  1192-1193. 


14    DETERMINATION  OF  RAILWAY  WAGES 

standard  rate  over  a  wider  area  than  the 
single  road  or  system;  they  planned  to  estab- 
lish uniformity  on  all  the  roads  in  a  certain 
district.  In  1902  the  employees  on  the  railways 
west  of  the  Mississippi  River  inaugurated 
the  movement  for  district  standardization. 
Prior  to  this  date,  approximate  uniformity 
had  been  secured  merely  by  separate  nego- 
tiations with  the  ofl&cials  of  individual  roads. 
Further  steps  toward  standardization  and  a 
higher  rate  were  halted  by  the  contention 
of  the  roads  that  they  were  already  paying 
as  much  as  their  neighbors  and  could  not 
be  expected  to  set  up  a  new  standard.^  The 
check  was  temporary,  however,  for  the  chief 
executives  of  the  Order  of  Railway  Conduc- 
tors and  the  Brotherhood  of  Railroad  Train- 
men conceived  the  idea  of  a  concerted  move- 
ment of  all  members  of  their  organizations 
west  of  the  Mississippi.  It  was  for  the  specific 
purpose  of  encouraging  district  standardiza- 
tion that  concerted  wage  bargaining  was  de- 
vised.2  A  meeting  at  Kansas  City  in  June, 
1902,  resulted  in  the  formation  of  the  West- 
ern Association  of  General  Committees  of  the 
Order  of  Railway  Conductors  and  the  Broth- 
erhood of  Railroad  Trainmen.  This  Associa- 
tion drew  up  a  schedule  of  rates,  which,  after 

1  Proceedings  of  the  Railway  Conductors,  1903,  pp.  18  S. 

*  Eastern  Firemen's  Arbitration  (1913),  Proceedings,  p.  2356. 


STANDARDIZATION  15 

being  almost  unanimously  approved  by  the 
rank  and  file  of  the  organizations,  was  sub- 
mitted simultaneously  to  the  management  of 
the  separate  roads.  The  first  roads  on  which 
a  settlement  was  concluded  were  the  Mis- 
souri, Kansas  and  Texas,  the  Mijssouri  Pacific, 
the  Frisco,  and  the  St.  Louis  Southwestern, 
and  these  rates  were  gradually  adopted  by 
separate  agreement  on  the  other  roads  west 
of  the  Mississippi.^ 

In  the  next  concerted  movement  in  the 
West  conducted  by  the  Brotherhood  of  Lo- 
comotive Engineers  in  1906,  a  new  plan  of 
dealing  with  the  railways  was  tried.  Instead 
of  effecting  separate  agreements  with  the  in- 
dividual roads,  settlement  was  made  for  all 
the  railways  in  one  series  of  negotiations  be- 
tween the  representatives  of  the  employees 
and  a  Conference  Committee  of  General 
Managers,  appointed  by  the  railways  and 
given  power  to  arrange  a  schedule  applicable 
to  the  whole  territory.^  With  a  few  excep- 
tions, this  plan  has  been  followed  in  succeed- 
ing concerted  movements.  The  result  of  these 
wholesale  wage  negotiations  in  the  West  was 
virtual  standardization  of  wages  and  working 
conditions  of  the  conductors  and  trainmen  on 
a  distinct  basis.    The  railways  were  less  in- 

^  Proceedings  of  the  Railway  Conductors,  1903,  pp.  18  ff.;  ibid., 
1905,  p.  10  S. 
2  Ibid.,  1907,  p.  71. 


16    DETERMINATION  OF  RAILWAY  WAGES 

clined  to  refuse  the  demands  of  the  employees 
than  they  had  been  when  individual  roads 
only  were  concerned.  By  this  new  method  of 
wage  bargaining,  the  employees  brought  the 
full  force  of  their  organization  in  a  vast  terri- 
tory to  bear  upon  the  railways,  and  the  latter, 
fearing  a  general  tie-up  of  traffic  by  a  strike 
and  knowing  the  effect  which  this  would  have 
upon  the  public,  were  led  to  accede  to  the 
men's  demands. 

The  success  of  the  Western  Conductors* 
and  Trainmen's  concerted  movement  in  1902 
assured  the  adoption  of  this  method  in  future 
negotiations.  The  Engineers  and  Firemen 
soon  fell  into  line,  but  the  Conductors  and 
Trainmen  took  the  lead  in  the  formation  of 
associations  of  general  committees  in  other 
sections  of  the  country.  The  question  of  a 
Southern  Association  of  these  two  organiza- 
tions was  discussed  as  early  as  November, 
1903,  but  it  was  not  until  a  meeting  in  At- 
lanta, in  February,  1905,  that  definite  action 
resulted  in  the  organization  of  the  Southern 
Association.^  The  first  Eastern  Association 
of  General  Committees  was  organized  by  the 
Conductors  and  Trainmen  in  a  meeting  at 
Buffalo  in  March,  1907,  but  a  concerted 
movement  for  increased  wages  was  deferred 
on  account  of  the  prevailing  business  depres- 

1  Proceedings  of  the  Railway  Conductors,  1905,  pp.  79-80. 


STANDARDIZATION  17 

sion.^  At  the  present  time,  all  the  train- 
service  unions  in  the  United  States  ^  have 
machinery  for  the  formation  of  Associations 
of  General  Committees  or  Federated  Boards 
to  conduct  concerted  wage  movements.  The 
Conductors  and  Trainmen  usually  unite  in 
their  movements,  and  recently  the  Engineers 
and  Firemen  have  laid  aside  their  former  ani- 
mosity, and  have  agreed  upon  a  plan  of  fed- 
eration,^ which  was  put  into  practical  opera- 
tion in  their  Western  concerted  movement 
early  in  1915.  Although  there  have  been 
numerous  attempts  to  federate  the  four  train- 
service  brotherhoods  in  one  concerted  move- 
ment, only  once  has  this  been  accomplished, 
when  in  1908,  at  the  request  of  the  Western 
railways,  representatives  of  the  four  organiza- 

'  Proceedings  of  the  Railway  Conductors,  1907,  pp.  72-73  ;  ibid., 
1909,  pp.  89-96. 

2  The  three  railway  districts  recognized  by  the  Interstate  Com- 
merce Commission  are  defined  by  the  Eastern  Engineers'  Arbitra- 
tion Board  (1912)  as  follows:  "The  Eastern  District  comprises  that 
portion  of  the  United  States  bounded  on  the  West  by  the  northern 
and  western  shores  of  Lake  Michigan  to  Chicago,  thence  by  a  line 
to  Peoria,  thence  to  East  St.  Louis,  thence  down  the  Mississippi 
River  to  the  mouth  of  the  Ohio  River,  and  on  the  South  by  the  Ohio 
River  from  its  mouth  to  Parkersburg,  West  Virginia,  thence  by  a 
line  to  the  southwestern  corner  of  Maryland,  thence  by  the  Potomac 
River  to  its  mouth.  The  Southern  District  comprises  that  portion  of 
the  United  States  bounded  on  the  north  by  the  Eastern  District,  and 
on  the  West  by  the  Mississippi  River.  The  remainder  of  the  United 
States,  exclusive  of  Alaska  and  of  island  possessions,  is  included  in 
the  Western  District"  (Eastern  Engineers'  Arbitration  (1912),  Re- 
port of  Board,  note,  pp.  12-13). 

'  Joint  Agreement  of  May  17,  1913;  Constitution  of  Brotherhood 
of  Locomotive  Firemen  and  Enginemen,  1913,  p.  157. 


18    DETERMINATION  OF  RAILWAY  WAGES 

tions  signed  an  agreement  concerning  the 
application  of  the  Federal  Hour  Law.^  At 
this  writing,  the  train-service  employees  are 
considering  a  nation-wide,  federated  move- 
ment to  secure  a  universal  eight-hour  day  and 
time  and  a  half  for  overtime. 

Since  the  inauguration  of  the  concerted 
movement  in  the  Western  District  in  1902, 
eighteen  such  movements  have  been  con- 
ducted by  the  train-service  organizations, 
nine  in  the  West,  five  in  the  South,  and  four 
in  the  East.^  Undoubtedly  they  have  been  of 
benefit  to  the  employees  both  in  removing  the 
injustices  attending  the  lack  of  standardiza- 
tion, and  in  raising  wages  and  improving 
working  conditions.  The  railways,  too,  have 
benefited,  for  the  concerted  movement,  by 
making  district  standardization  possible,  has 
removed  a  source  of  irritation  and  ill-feeling 
between  the  employees  and  the  railway  man- 
agements. As  to  the  future,  it  is  safe  to  say 

^  Proceedings  of  the  Railway  Conductors,  1909,  pp.  82-85. 

*  These  eighteen  concerted  movements  were  as  follows:  (1902), 
Conductors  and  Trainmen  in  the  West;  (1906),  Engineers  in  the 
West;  (1907),  Conductors  and  Trainmen  in  the  West,  Firemen  in 
the  West,  Engineers  in  the  South,  and  Conductors,  Trainmen,  Fire- 
men, and  Engineers  in  the  South;  (1908),  Conductors,  Trainmen, 
Engineers  and  Firemen  in  the  West;  (1910),  Conductors  and  Train- 
men in  the  West,  Firemen  in  the  West,  and  Engineers  in  the  West, 
Conductors  and  Trainmen  in  the  South,  Conductors  and  Train- 
men in  the  East;  (1911),  Engineers  in  the  South;  (1912),  Conduc- 
tors and  Trainmen  in  the  South,  Engineers  in  the  East;  (1913),  Con- 
ductors and  Trainmen  in  the  East;  Firemen  in  the  East;  (1915), 
Engineers  and  Firemen  in  the  West. 


STANDARDIZATION  19 

that  movements  involving  sometimes  as  many 
as  one  hundred  thousand  men  and  costing 
thousands  of  dollars  will  not  be  undertaken 
upon  trivial  grounds.^  Thus  there  will  un- 
doubtedly be  a  lessening  in  the  number  of 
demands  for  wage  increases  on  petty  and 
frivolous  grounds;  and  the  organizations  and 
the  railways,  instead  of  wasting  energy  and 
money  and  threatening  public  welfare  in  nu- 
merous small  disputes,  may  turn  their  atten- 
tion to  the  settlement  of  such  larger  questions 
as  the  eight-hour  day  and  the  proper  pay- 
ment for  overtime.^ 

The  four  train-service  brotherhoods  in  the 
United  States  agree  that  within  the  Eastern, 
Southern,  and  Western  Districts  a  standard 
rate  should  be  applied  uniformly  on  all  the 
roads.  This  has  been  the  chief  contention  of 
the  employees  in  all  concerted  movements  in- 
volving the  roads  within  a  district,  and  in 
those  disputes  involving  only  a  single  road, 
the  employees  have  invariably  claimed  that 
they  were  not  receiving  the  rate  paid  for  the 
same  service  on  other  roads  in  that  district.^ 

'  Address  of  Hon.  Seth  Low  before  the  annual  meeting  of  the  Na- 
tional Civic  Federation  in  1914,  quoted  in  The  Railway  Library, 
1913,  p.  153. 

2  The  Railroad  Trainmen,  September,  1914,  p.  848. 

3  This  claim  was  introduced  in  the  Chicago  and  Western  Indiana 
and  Belt  Railway  Co.  Arbitration;  Chicago,  Burlington  and  Quincy; 
Georgia  and  Florida;  Coal  and  Coke;  Denver  and  Rio  Grande; 
Wheeling  and  Lake  Erie,  Wabash,  Pittsburgh  Terminal,  West  Side 
Belt  Railway. 


20    DETERMINATION  OF  RAILWAY  WAGES 

The  employees  point  to  the  diversity  of  rates 
existing  on  different  lines  as  one  of  the  chief 
sources  of  disputes  with  the  railways.  The 
men  on  a  certain  road  are  bound  to  be  dis- 
contented and  restive  if  they  know  that  their 
fellow  workmen  in  the  same  grade  of  employ- 
ment on  a  neighboring  line  are  receiving  a 
higher  rate  of  pay.^  Another  disadvantage  of 
a  lack  of  uniformity,  the  men  assert,  is  the 
absolute  impossibility  of  making  exact  com- 
parisons in  wages  from  year  to  year.  This  is 
evidenced  by  the  diflSculty  experienced  by  all 
arbitration  boards  in  discovering  just  what 
has  been  the  increase  in  wages  in  a  given 
period  of  time.^  The  employees  claim,  also, 
that  since  a  standard  rate  covering  areas  as 
large  as  the  railway  districts  has  been  estab- 
lished with  beneficial  results  in  other  in- 
dustries, their  demands  may  be  based  on 
precedent.  Thus  the  firemen  in  the  Eastern 
Arbitration  of  1913  called  attention  to  the 
peace  and  contentment  existing  among  the 
miners,  printers  and  building  trades  where  a 
district  standard  is  applied,  in  comparison 
with  the  discontent  and  unrest  of  the  steel 
and  textile  workers.^ 

'  Western  Engineers  and  Firemen's  Arbitration  (1915),  Proceed- 
ings, p.  7409. 

2  Ibid.,  Employers'  Brief,  pp.  6-7;  Eastern  Firemen's  Arbitration 
(1913),  Proceedings,  pp.  2358-2359. 

*  See  also  Western  Engineers  and  Firemen's  Arbitration  (1915), 
Employees'  Brief,  p.  3. 


STANDARDIZATION  21 

The  employees  maintain  that  the  varying 
physical  and  traffic  conditions  on  the  different 
roads  should  not  constitute  a  basis  for  the 
payment  of  various  rates.  It  may  be  true, 
they  hold,  that  physical  conditions  and  traf- 
fic peculiarities  differ  as  between  individual 
roads,  but  it  would  be  impossible  to  deter- 
mine a  separate  rate  of  pay  for  each  special 
condition.  In  the  course  of  the  development 
of  the  railways  conditions  are  always  chang- 
ing. Grades  may  be  leveled,  additional 
tracks  laid,  curves  straightened,  passenger 
and  freight  densities  may  differ  from  year  to 
year  and  from  day  to  day.  The  attempt  to 
determine  the  proper  rates  for  each  different 
condition,  and  to  change  them  as  the  condi- 
tions change,  the  employees  assert,  is  obvi- 
ously absurd.  The  plan  of  fixing  a  standard 
rate  governing  an  entire  district  may  be  illogi- 
cal and  its  basis  arbitrary,  but  "it  is  deemed 
the  best  devised  and  does  substantial  justice 
in  a  broader  sense  than  any  other  system."^ 
If  the  roads  were  allowed  to  fix  rates  on  the 
basis  of  varying  conditions,  discriminations 
between  the  employees  on  different  roads 
would  surely  follow.  A  standard  rate  in 
force  on  all  the  roads  in  a  district  is  claimed 
to  be  the  only  equitable  system. ^ 

^  Chicago,  Burlington  and  Quincy  Arbitration  (1913),  Proceed- 
ings, pp.  9789-9791. 

*  Western  Engineers  and  Firemen's  Arbitration  (1913),  Em- 
ployees' Brief,  p.  1. 


22    DETERMINATION  OF  RAILWAY  WAGES 

Another  phase  of  the  employees'  argument 
against  the  relation  of  rates  and  conditions  con- 
cerns the  ability  of  the  separate  roads  to  pay 
the  standard  rate.  The  brotherhoods  assert 
that  rates  within  the  district  should  not  be 
influenced  by  the  relative  wealth  of  the  roads 
but  that  all  should  be  required  to  pay  the 
standards  of  the  district  whether  their  finan- 
cial condition  be  prosperous  or  otherwise. 
The  reasons  upon  which  this  position  is  based 
are  manifold.  In  the  first  place,  the  employees 
hold  that  the  efiiciency  of  a  workman  of  a 
certain  grade  employed  on  a  prosperous  road 
is  just  as  great,  his  labor  is  equally  onerous, 
and  his  risk  and  responsibility  are  the  same 
as  the  efficiency,  labor,  and  responsibility  of  a 
workman  employed  on  a  bankrupt  line,  and 
therefore  that  there  is  no  justification  for  any 
difference  in  the  wages  paid.^  Again,  the  em- 
ployees maintain  that  just  as  the  separate 
roads  are  obliged  to  purchase  cars,  coal,  loco- 
motives, and  other  equipment  at  a  uniform 
price  regardless  of  their  varying  financial  con- 
ditions, they  should  be  required  to  purchase 
their  labor  at  a  uniform  price.^  Further,  it  is 
not  the  custom  in  other  industries  to  permit 
an  unprosperous  firm  to  pay  wages  below  the 
standard.  All  employees  are  on  the  same  level 

^  Western  Engineers  and  Firemen's  Arbitration  (1915),  Em- 
ployees' Brief,  pp.  4-5. 

^  The  Railroad  Trainman,  February,  1910,  p.  152. 


STANDARDIZATION  23 

in  this  respect.^  In  final  support  of  their  posi- 
tion, the  employees  refer  to  the  numerous  de- 
cisions of  Federal  courts  in  which  it  has  been 
held  that  the  inability  of  a  road  to  pay  divi- 
dends on  its  stocks  and  interest  on  bonds,  or 
the  necessity  for  the  issuance  of  receivers'  cer- 
tificates to  defray  expenses  of  operations,  is 
not  sufficient  cause  for  reducing  wages  below 
those  paid  on  other  lines  in  the  vicinity  for 
similar  work.^ 

The  railways  oppose  district  standardiza- 
tion on  the  ground  that  rates  cannot  be  dis- 
associated from  conditions  and  since  condi- 
tions vary  widely  on  different  roads  in  such 
extensive  territories  as  the  railway  districts, 
they  maintain  that  rates  cannot  be  made 
uniformly  applicable  on  all  the  roads.  The 
amount  of  compensation,  the  roads  hold,  is 
governed  by  the  labor  performed,  the  skill 
and  efficiency  required,  the  responsibility  and 
hazard  involved,  the  discipline  necessary,  the 
rapidity  of  promotion,  and  the  cost  of  living.^ 
These  various  elements  depend,  for  the 
greater  part,  upon  the  physical  conditions 
under  which  the  labor  is  performed,  the  na- 

*  Eastern  Firemen's  Arbitration  (1913),  Employees'  Brief,  p. 
1206. 

^  Eastern  Engineers'  Arbitration  (1912),  Employees'  Brief,  pp. 
10-14;  Eastern  Firemen's  Arbitration  (1913),  Employees'  Brief, 
pp.  1206-1209;  Western  Engineers  and  Firemen's  Arbitration  (1915), 
Employees'  Brief,  pp.  4-5. 

*  Coal  and  Coke  Arbitration  (1911),  Proceedings,  p.  1012. 


24    DETERMINATION  OF  RAILWAY  WAGES 

ture  of  the  territory  through  which  the  Kne 
operates,  which  governs  the  length  and  dif- 
ficulty of  the  runs,  the  number  of  tracks, 
curves,  crossings,  etc.,  the  size  of  locomotives 
and  trains,  and  the  number  of  tons  or  passen- 
gers carried  per  train.  ^  In  so  far  as  these  con- 
ditions are  similar  on  the  different  railways 
within  a  certain  territory,  the  roads  admit 
that  the  rates  may  properly  be  made  uniform, 
for  identical  pay  for  identical  service  is  just.^ 
But  it  is  impossible  to  make  these  conditions 
similar  on  all  the  roads,  and  therefore,  where 
differences  exist,  they  should  be  reflected  in 
the  rates  of  compensation.^  District  stand- 
ardization can  be  accomplished  only  by  fixing 
rates  upon  some  arbitrary  basis,  and  this  will 
be  done  at  the  expense  of  justice  and  equity.* 
The  railways  maintain,  further,  that  the 
rate  of  compensation  should  bear  some  rela- 
tion to  the  earning  capacity  of  the  different 

*  Georgia  and  Florida  Arbitration  (1914),  Report  of  Board,  p.  2; 
Coal  and  Coke  Arbitration  (1911),  Proceedings,  p.  1013;  Eastern 
Firemen's  Arbitration  (1913),  Railways'  Brief,  p.  7;  Eastern  En- 
gineers' Arbitration  (1912),  Railways'  Brief,  pp.  7-8,  15-17. 

*  Western  Engineers  and  Firemen's  Arbitration  (1915),  Pro- 
ceedings, p.  7560;  Eastern  Firemen's  Arbitration  (1913),  Railways' 
Brief,  p.  15;  Eastern  Engineers'  Arbitration  (1912),  Railways'  Brief, 
p.  15. 

'  Wheeling  and  Lake  Erie,  etc.,  Arbitration  (1913),  Proceedings, 
pp.  809-310;  Eastern  Firemen's  Arbitration  (1913),  Railways' 
Brief,  p.  15;  Coal  and  Coke  Arbitration  (1911),  Proceedings,  pp. 
1011-1013;  Eastern  Engineers'  Arbitration  (1912),  Railways'  Brief, 
p.  15. 

*  Eastern  Firemen's  Arbitration  (1913),  Railways'  Brief,  p.  61. 


STANDARDIZATION  25 

roads,  for,  otherwise,  uniformity  would  re- 
sult in  an  undue  burden  upon  the  less  pros- 
perous lines.  It  is  intimated  that  the  stand- 
ard rate  demanded  by  the  employees  is 
determined  by  the  ability  of  the  more  pros- 
perous roads  to  pay  and  that  the  financially 
weaker  lines  are  in  danger  of  having  their 
revenues  so  cut  by  the  increase  in  wages  as 
seriously  to  impair  their  credit  and  to  force 
the  suspension  of  dividends.^  The  railroad's 
representative  in  the  Georgia  and  Florida 
Arbitration  (1914)  maintained  that  since  the 
road  concerned  was  not  earning  dividends,  if 
the  employees  were  to  receive  as  a  right  what 
the  employer  did  not  earn,  it  would  be  a  clear 
case  of  confiscation.  The  road  would  become 
insolvent  and  the  stockholders  would  suffer.^ 
The  public  also  would  feel  the  effect  of  the 
men's  demands,  for  those  sums  from  which 
money  is  deducted  to  replace  rotten  cross- 
ties,  unsafe  bridges  and  steel  cars,  and  to  give 
the  general  public  safe  and  satisfactory  serv- 
ice, would  be  diminished  by  just  so  much 
as  the  employees  demanded.^  Each  individ- 
ual road,  therefore,  should  pay  the  wages 
which  its  financial  standing  permits,  and  in 

^  Eastern  Engineers'  Arbitration  (1912),  Railways'  Brief,  pp. 
18-20. 

*  Georgia  and  Florida  Arbitration  (1914),  Report  of  Board,  pp. 
8-9,  11. 

«  Ibid.,  p.  9. 


26    DETERMINATION  OF  RAILWAY  WAGES 

those  cases  involving  a  number  of  roads,  the 
rate  paid  by  each  should  be  considered  sepa- 
rately and  should  bear  some  relation  to  the 
road's  financial  capacity. 

In  addition  to  the  above  arguments  against 
district  standardization,  the  railways  deny 
the  employees'  claim  that  other  industries 
pay  a  standard  rate  in  an  area  as  large  as 
the  railway  districts.  ^  Everywhere  there  is  a 
wide  diversity  in  wages,  and  this  fact,  the 
railways  claim,  is  sufficient  reason  for  the 
boards  to  decline  district  standardization. 

Railway  arbitration  boards  have  not  taken 
any  consistent  stand  on  the  question  of  dis- 
trict standardization  from  which  a  general 
statement  as  to  their  attitude  can  be  made. 
The  acceptance  of  the  principle  of  district 
standardization  is  conditioned  upon  the  ac- 
ceptance of  the  employees'  claim  that  rates 
should  not  be  influenced  by  physical  and 
traffic  conditions  peculiar  to  individual  roads 
nor  by  the  varying  ability  of  separate  roads 
to  pay  the  standard.  The  Eastern  Engineers' 
Board  (1912)  refused  to  take  the  employees' 
view,  holding  that  it  was  improper  to  award 
the  same  rate  of  compensation  without  re- 
spect to  differences  on  the  roads  in  the  East- 
ern District.  The  reasons  given  for  this  find- 

'  Eastern  Engineers'  Arbitration  (1912),  Railways'  Brief,  pp. 
17-18;  Eastern  Firemen's  Arbitration  (1913),  Railways'  Brief,  p.  7, 
Proceedings,  pp.  2473-2474. 


STANDARDIZATION  27 

ing  were  that  in  no  part  of  the  country  was 
this  the  practice  on  the  railways  and  that  the 
heavier  traffic  on  certain  roads  undoubtedly 
made  the  labor  more  exacting  and  onerous.  ^ 
In  the  Clark-Morrissey  Award  on  the  New 
York  Central,  the  principle  of  district  stand- 
ardization was  held  to  be  generally  advan- 
tageous, but  some  variations  on  account  of 
conditions  different  from  other  railways  were 
recognized  and  the  rates  awarded  varied  ac- 
cordingly. On  the  other  hand,  the  standards 
granted  in  the  Eastern  Engineers',  Firemen's, 
and  Conductors  and  Trainmen's  awards,  and 
in  the  Western  Engineers  and  Firemen's 
Award,  and  made  applicable  to  all  the  roads 
within  those  districts,  seem  to  indicate  that 
district  standardization  has  been  recognized, 
and  if  any  variations  in  rates  to  accompany 
varying  conditions  on  the  different  roads  are 
permitted,  the  rates  are  not  to  be  lower  than 
the  standard  granted  in  these  awards. 

In  disputes  involving  single  roads  the  gen- 
eral attitude  of  the  boards  has  been  to  award 
rates  which  will  bring  wages  on  the  road  in 
question  to  a  level  with  those  paid  on  neigh- 
boring lines.  For  instance,  in  the  case  of  the 
Southern  Railway  vs.  Maintenance  of  Way 
Employees    (1913),    the   board    resorted    to 

^  Eastern  Engineers'  Arbitration  (1912),  Report  of  Board,  pp. 
23-24, 


28    DETERMINATION  OF  RAILWAY  WAGES 

"...  a  comparison  with  labor  on  other  rail- 
roads where  duties  are  the  same  and  classi- 
fications nearly  identical." ^  And,  again,  in  the 
Georgia  and  Florida  Arbitration  (1914)  the 
board  held  that  the  rates  "...  should  con- 
form as  nearly  as  may  be  to  the  rates  paid  by 
the  other  roads  for  similar  service  in  the  same 
section  of  the  country.^  This  has  been  the 
usual  practice  in  Canada,  although  there 
have  been  exceptions.^  In  the  case  of  the 
Grand  Trunk  Railw^ay  vs.  Conductors  and 
Trainmen  (1910)  the  board  stated  that  the 
men  "...  are  justified  in  asking  that  roads  in 
the  same  territory  should  standardize  their 
rates  of  pay  and  their  rules  also  so  far  as  they 
may  deal  with  like  general  conditions  of 
service."  *  The  chairman  appointed  in  the 
case  of  the  Canadian  Pacific  Railway  vs. 
Maintenance  of  Way  Employees  (1914)  held, 
similarly,  that  there  was  no  reason  why  "... 
one  equally  capable  member  of  the  same 
brotherhood,  doing  the  same  work,  should  be 

^  Southern  Railway  Arbitration  (1913),  Report  of  Board,  p.  14. 

^  Georgia  and  Florida  Arbitration  (1914),  Report  of  Board,  p.  2. 

'  The  board,  in  the  case  of  the  Conductors  and  Trainmen  vs.  the 
Canadian  Pacific  Railway  (1914),  refused  to  grant  a  uniform  schedule 
for  the  Prairie  and  Pacific  divisions  on  account  of  " .  .  .  the  various 
peculiar  existing  conditions  surrounding  the  service  on  the  Prairie 
and  Pacific  Divisions,  arising  from  the  natural  physical  conditions, 
climatic  conditions  and  the  length  of  the  train  mileage  and  time 
allowed  therefor  ..."  (Report,  Registrar  of  Boards  of  Concilia- 
tion and  Investigation,  1915,  p.  119). 

*  Grand  Trunk  vs.  Conductors  and  Trainmen  (1910),  Report, 
Registrar  of  Boards  of  Conciliation  and  Investigation,  1911,  p.  133. 


STANDARDIZATION  29 

paid  less,  or  be  under  greater  disadvantages 
in  any  way  in  his  service  than  another  simply 
because  one  happened  to  be  employed  on  one 
railway  and  the  other  on  another."  ^ 

In  regard  to  the  plea  of  individual  roads 
that  they  are  unable  to  pay,  the  findings  of 
arbitration  boards  have  been  fairly  uniform 
in  favor  of  the  employees'  claims.  The  board 
in  the  Southern  Railway  case  against  the 
Maintenance  of  Way  Employees,  however, 
held  that  the  road  had  fully  established  its 
inability  to  pay,  and  although  an  average 
rate  was  awarded,  the  board  asserted  that 
".  .  .  the  fair  rule  would  probably  be  to  fix 
wages  not  at  the  highest  nor  even  at  the  aver- 
age rate,  but  at  the  lowest  rate  that  could 
readily  command  the  services  that  were 
needed."  ^  This  finding  is  an  exception.  In 
the  dispute  involving  the  switchmen  on  roads 
leading  into  Chicago,  the  roads  claimed  that 
the  ability  of  each  to  pay  should  be  consid- 
ered separately,  but  the  board  overruled  this 
point  by  the  statement  that  "...  this  is  a 
joint  arbitration  to  which  there  are  virtually 
two  parties.  .  .  ."  The  board  went  on  to  say 
that  "...  in  its  findings  it  has  endeavored 
to  adapt  itself  to  the  average  of  the  lines, 
rather  than  upon  either  extreme.  .  .  .    We 

^  Canadian  Pacific  vs.  Maintenance  of  Way  Employees  (1914),  in 
Labour  Gazette  (Canada),  February,  1914,  p.  907. 

'  Southern  Arbitration  (1913),  Report  of  Board,  p.  6. 


30    DETERMINATION  OF  RAILWAY  WAGES 

are  also  of  the  opinion  that  those  companies 
must  be  regarded  as  able  to  pay  operating 
cost,  including,  of  course,  just  and  reasonable 
wages  to  the  class  of  employees  parties  to 
this  arbitration."  ^  The  Georgia  and  Florida 
Board  hold  that,  although  the  road  was  not 
earning  enough  to  meet  its  expenses,  "the 
employees  have  the  first  claim  on  the  earn- 
ings of  a  road  for  a  reasonable  wage  to  be 
determined  not  by  the  financial  condition  of 
the  company,  but  by  the  rates  paid  by  other 
roads  in  the  same  section  of  the  country  for 
the  services."  ^ 

In  the  large  concerted  movements  the  roads 
have  always  been  considered  as  a  whole,  the 
boards  refusing  to  permit  the  condition  of 
individual  roads  to  influence  the  payment  of 
a  standard  rate  throughout  the  district.  The 
position  of  the  board  in  the  Eastern  Engineers' 
Arbitration  (1912)  is  typical.  Upon  investi- 
gation it  was  found  that  the  New  York  Cen- 
tral, New  Haven,  Pennsylvania,  Baltimore 
and  Ohio,  Reading,  and  Erie  controlled  di- 
rectly eighty  per  cent  of  the  mileage  operated 
in  the  Eastern  District,  and  that  some  of  the 
independent  roads  were  indirectly  controlled 
through  a  system  of  interlocking  directo- 
rates.   A  dependent  road,  while  unprofitable 

^  Chicago  Switchmen's  Arbitration  (1910),  Railway  Age  Gazette, 
Vol.  XLViii,  No.  14,  pp.  960-961. 

^  Georgia  and  Florida  Arbitration  (1914),  Report  of  Board,  p.  4- 


STANDARDIZATION  31 

in  itself,  might  be  profitable  to  the  system 
to  which  it  belongs  by  serving  as  a  valuable 
feeder  to  a  larger  line.  For  these  reasons  the 
arguments  of  the  less  prosperous  roads  as  to 
their  inability  to  pay  were  held  to  be  some- 
what weakened.  The  board  maintained  that 
it  was  unable  to  state  with  any  certainty 
whether  the  less  prosperous  roads  were  able 
to  pay,  but  it  eliminated  the  claim  of  the 
roads,  and  applied  a  standard  rate  uniformly 
to  profitable  and  unprofitable  roads.  ^ 

III.  National  Standardization 

Railway  employees  in  all  sections  of  the 
country  are  committed  to  the  policy  of  dis- 
trict standardization;  the  employees  in  the 
Eastern  District,  however,  entertain  the  ideal 
of  national  uniformity,  the  payment  of  a  uni- 
form standard  rate  throughout  the  United 
States.  In  the  three  concerted  movements 
conducted  by  the  Eastern  Engineers,  Fire- 
men, and  Conductors  and  Trainmen  since 
1912,  the  employees  have  urged  the  adoption 
of  a  rate  which  would  reduce  or  entirely 
abolish  the  differential  in  wages  existing  in 
favor  of  the  West  over  the  East.  Until  1910 
the  wage  scale  in  the  South  had  always  been 
less  than  in  the  East,  and  in  the  West,  train- 

^  Eastern  Engineers'  Arbitration  (1912),  Report  of  Board,  pp. 
25-46. 


32    DETERMINATION  OF  RAILWAY  WAGES 

service  employees  have  always  enjoyed  a 
differential  over  those  in  the  other  railway 
districts.  According  to  information  obtained 
by  the  Eastern  Conductors  and  Trainmen's 
Board,  engineers  in  the  West  in  1913  re- 
ceived a  wage  5.3  per  cent  in  excess  of  that 
paid  to  the  same  class  in  the  East;  firemen, 
7.3  per  cent;  conductors,  16.1  per  cent;  and 
brakemen  7.1  per  cent.^  The  employees  in 
the  East  propose  to  abolish  these  differen- 
tials for  they  consider  that  the  more  favor- 
able position  of  the  Western  men  is  due  to  the 
earlier  and  more  aggressive  activity  of  the 
employees  in  the  Western  District,  and  not 
to  any  essential  differences  between  the  dis- 
tricts. 

The  employees  base  their  claim  for  na- 
tional standardization  on  the  ground  that 
railroad  service,  regarded  from  a  purely 
technical  point  of  view,  is  practically  identi- 
cal the  country  over,  with  the  exception  of 
the  mountainous  districts  in  the  West,  where 
permanent  natural  conditions  justify  the 
payment  of  higher  compensation.  They 
assert  that  the  equipment  handled  by  the 
employees  has  been  standardized  to  a  great 
extent;  that  motive  power  specifications  and 
conditions   of    gradient   and   curvature   are 

*  Eastern  Conductors  and  Trainmen's  Arbitration  (1913),  Re- 
port of  Board,  p.  8. 


STANDARDIZATION  33 

virtually  the  same;  and  that  employees  are 
held  responsible  under  the  same  code  of  dis- 
cipline.^ Since  there  is  uniformity  of  opera- 
tion, of  requirements,  and  of  labor  existing 
throughout  the  East  and  West,  there  is  no 
justification  for  tlie  payment  of  a  favorable 
differential  in  the  latter  district.  The  em- 
ployees claim,  furthermore,  that  living  con- 
ditions in  these  two  areas  are  practically 
identical.  There  is  little  difference  in  the 
cost  of  necessary  commodities;  while  the  en- 
vironment, that  is,  climatic  conditions  and 
opportunities  for  education,  for  religious  ob- 
servances, and  for  recreation,  is  practically 
the  same  East  and  West.^ 

Indeed,  the  employees  claim,  if  any  dis- 
trict enjoys  a  favorable  differential,  it  should 
be  the  East;  for  some  of  the  conditions  sur- 
rounding railroad  service  are  less  desirable 
in  that  district  than  in  any  other  section  of 
the  country.  Thus  the  Eastern  Engineers 
point  out  that  the  traffic  in  the  East  is  more 
congested,  that  there  are  more  block  signals 
to  look  out  for,  and  more  requirements  as  to 
time  schedules  and  high  speed. ^  The  Con- 
ductors and  Trainmen  assert  also  that  the 

^  Eastern  Conductors  and  Trainmen's  Arbitration  (1913),  Report 
of  Board,  pp.  11-12;  Proceedings,  1915,  pp.  872-874. 

2  Ibid.,  Proceedings,  pp.  1910-1914. 

'  Eastern  Engineers'  Arbitration  (1912),  Employees'  Brief,  p. 
22. 


34    DETERMINATION  OF  RAILWAY  WAGES 

average  time  on  duty  is  longer  in  the  East 
than  in  the  West.^ 

Finally,  the  Eastern  employees  claim  that 
the  wages  paid  in  other  trades  do  not  differ 
materially  East,  West,  and  South.  They 
assert  that  the  railways'  exhibits  showing 
that  higher  wages  are  paid  in  the  West  than 
in  the  East  are  inconclusive,  since  the  figures 
given  fail  to  make  allowance  for  the  lowering 
of  wages  in  the  East  in  certain  trades  due 
to  the  strong  competition  of  foreign  labor. 
Wages  in  the  East  in  those  industries  em- 
ploying foreign  labor  may  be  lower  than  in 
the  West,  where  there  is  little  competition 
with  foreigners;  but  it  would  be  unfair  to 
allow  this  fact  to  affect  the  compensation  of 
railway  labor,  which  is  almost  entirely  na- 
tive-born throughout  the  country.'^ 

The  railways  in  the  Eastern  District  are 
strongly  opposed  to  the  application  there  of 
the  Western  rates.  They  maintain  that  if 
earnings  are  considered  instead  of  rates,  the 
differences  in  wages  between  the  East  and 
West  are  not  so  wide  as  the  employees  claim. 
Thus,  it  was  pointed  out  in  the  Eastern  Fire- 
men's Arbitration  that  there  is  more  construc- 
tive mileage  in  the  East  than  in  the  West, 
since  in  the  latter  district  the  railways  are 

^  Eastern  Conductors  and  Trainmen's  Arbitration  (1913),  Report 
of  Board,  p.  13. 
'  Ibid.,  Employees'  Brief,  p.  25. 


STANDARDIZATION  35 

able  to  get  longer  runs  within  the  minimum 
day.^  Schedule  rates  in  the  West,  however, 
the  railways  admit,  are  higher  and  always 
have  been,  and  this  very  fact  is  suflScient 
reason  for  maintaining  the  differential  be- 
tween the  two  districts.^  To  strengthen  this 
position,  the  roads  claim  that  in  other  indus- 
tries it  is  the  practice  to  pay  higher  wages 
in  the  West  than  in  the  East,  and  there  is 
no  justification  for  the  railways  overturn- 
ing precedent  and  establishing  national  uni- 
formity.^ 

Objection  is  made  also  to  the  use  of  the 
Western  rates  as  a  model  for  the  Eastern. 
The  railways  claim,  on  the  strength  of  the 
employees'  statement,  that  the  high  rates  ex- 
isting in  the  West  are  a  result  of  the  aggres- 
siveness of  the  Western  employees:  "Rates 
that  have  been  established  by  coercion  cannot 
justly  be  cited  as  a  precedent  and  therefore, 
the  rates  in  the  West  cannot  be  used  as  a  ba- 
sis upon  which  to  build  the  entire  rate  struc- 
ture of  the  Eastern  Territorj^  The  equity  of 
the  rates  in  the  West  has  not  been  touched 

^  Eastern  Firemen's  Arbitration  (1913),  Proceedings,  p.  2460; 
Eastern  Conductors  and  Trainmen's  Arbitration  (1913),  Railways' 
Brief,  p.  25. 

*  Eastern  Conductors  and  Trainmen's  Arbitration  (1913),  Pro- 
ceedings, p.  2047;  Eastern  Engineers'  Arbitration  (1912),  Pto- 
ceedings,  p.  1969. 

'  Eastern  Conductors  and  Trainmen's  Arbitration  (1913),  Rail- 
ways' Reply  Brief,  p.  4. 


36    DETERMINATION  OF  RAILWAY  WAGES 

upon  by  the  employees,  much  less  proven, 
and  without  such  proof  theu*  value  as  a  deter- 
mming  factor  in  fixing  rates  for  the  Eastern 
District  is  nil."  ^ 

The  strongest  argument  of  the  railways 
against  national  standardization  is  connected 
with  the  lack  of  agreement  between  the  em- 
ployees in  the  Eastern  and  Western  Districts 
regarding  uniform  rates.  The  Western  em- 
ployees seem  to  consider  that  the  higher  rates 
paid  them  are  just,  and  insist  that  the  dif- 
ferential between  the  two  districts  be  main- 
tained. The  roads  state  that  after  the  gen- 
eral increase  in  wages  in  the  East  in  1910,  a 
move  was  immediately  started  in  the  West 
based  on  the  argument  that  the  Eastern 
rates  had  been  raised  and  therefore  the  West- 
ern rates  should  be  similarly  increased  so  that 
the  employees  might  restore  the  former  dif- 
ferential over  the  East.^  There  is  every  in- 
dication, the  roads  maintain,  that  this  prac- 
tice of  using  the  increases  in  one  district  as 
a  ground  for  increases  in  another  will  be  con- 
tinued, and  as  long  as  the  employees  do  not 
agree  upon  the  question  of  national  standard- 
ization, that  system  is  unattainable.^   This 

*  Eastern  Conductors  and  Trainmen's  Arbitration  (1913),  Rail- 
ways' Brief,  p.  9. 

2  Ibid:,  Railways'  Brief,  p.  8;  Proceedings,  pp.  1968-1970. 

'  Eastern  Firemen's  Arbitration  (1913),  Proceedings,  p.  2459. 
Eastern  Conductors  and  Trainmen's  Arbitration  (1913),  Report 
of  Board,  p.  64. 


STANDARDIZATION  37 

"endless  chain"  method  of  securing  wage  in- 
creases constitutes  a  real  hardship  to  the  rail- 
ways, and  is  neither  logical  nor  just.* 

No  arbitration  board  in  the  United  States 
has  given  unqualified  support  to  the  principle 
of  national  standardization.  The  awards  in 
the  Eastern  Engineers',  Firemen's,  and  Con- 
ductors and  Trainmen's  Arbitrations  failed 
to  secure  for  the  Eastern  train-service  em- 
ployees the  rates  current  in  the  West,  al- 
though the  increases  allowed  served  to  reduce 
the  differential  between  the  two  districts. 
The  Eastern  Conductors  and  Trainmen's 
Board  (1913)  gave  serious  attention  to  na- 
tional standardization,  summing  up  its  atti- 
tude in  the  statement  that  it  could  not  be 
controlled  in  its  findings  by  the  argument  for 
standardization,  although  it  might  be  in- 
fluenced by  it.^  The  extent  of  this  influence 
is  shown  by  the  action  of  the  board  in  raising 
the  rates  in  the  Eastern  District  to  the  level 
of  those  in  the  South,  which,  on  account  of 
the  concerted  movement  of  the  Conductors 
and  Trainmen  in  that  territory  in  1912,  had 
been  advanced  beyond  the  Eastern  rates. ^ 
The  board  held  that  uniformity  in  rates  of 
pay  in  the  East  and  South  was  justifiable 

^  Eastern  Firemen's  Arbitration  (1913),  Proceedings,  p.  2056. 
^  Eastern  Conductors  and  Trainmen's  Arbitration  (1913),  Re- 
port of  Board,  p.  15. 

»  Ibid.,  Report  of  Board,  pp.  16-17,  35. 


38    DETERMINATION  OF  RAILWAY  WAGES 

because  wages  in  other  industries  in  these  two 
districts  were  practically  the  same,  and, 
further,  that  it  was  "...  an  advantage 
worth  the  cost  even  partially  to  eliminate 
from  the  wage  problem  of  the  railroads  one 
of  the  differentials  now  existing."  ^  As  to 
uniformity  between  the  East  and  West,  the 
board  stated  that  this  was  at  present  im- 
possible, because  the  differential  affecting 
conductors  and  trainmen  between  the  two 
districts  was  very  large;  wages  in  other  in- 
dustries were  still  higher  in  the  West  than  in 
the  East;  and  it  was  not  clear  that  the  policy 
of  national  standardization  favored  in  the 
East  was  favored  by  the  Conductors  and 
Trainmen  in  the  West.^  In  regard  to  the  last 
reason  for  refusing  national  standardiza- 
tion, the  board  stated  that  "the  organiza- 
tions concerned  should  formally  and  officially 
commit  themselves  to  the  policy  of  stand- 
ardization between  the  East  and  West.  In 
the  absence  of  such  an  accepted  policy,  were 
this  board  to  place  the  pay  of  conductors  and 
trainmen  in  the  East,  as  they  are  asked  to 
do,  on  the  Western  basis,  such  an  increase  of 
the  wage  scale  in  the  East  might  serve  ...  to 
bring  about  a  new  movement  in  the  West  to 
secure  the  old  different ialas  against  the  East. ' '  ^ 

'  Eastern  Conductors  and  Trainmen's  Arbitration  (1913),  Re- 
port of  Board,  p.  37. 

^  Ibid.,  Report  of  Board,  p.  15.  ^  Ibid.,  p.  4. 


STANDARDIZATION  S9 

It  was  held,  however,  that  national  stand- 
ardization would  be  of  advantage  to  the  em- 
ployees, railways,  and  public,  and,  therefore, 
that  progress  should  be  made  in  that  direc- 
tion as  fast  as  possible.  Interstate  railroads, 
the  board  stated,  constituted  national  public 
utilities,  and  as  such,  would  be  obliged  in  the 
end  to  follow  the  practice  of  the  Railway 
Post-Office  Service  of  paying  uniform  rates 
regardless  of  the  district.^  Finally,  the  board 
suggested  that  before  any  further  steps  were 
taken  for  the  establishment  of  national 
standardization,  some  public  authority  au- 
thorized by  Congress  should  make  an  inde- 
pendent inquiry  as  to  whether  there  existed 
any  substantial  reason  for  a  wage  differen- 
tial between  the  West  and  East  based  on 
territorial  conditions.^ 

The  attitude  of  the  employees,  employers, 
and  arbitration  boards  toward  system,  dis- 
trict and  national  standardization  having 
been  outlined,  the  remainder  of  this  chapter 
will  be  concerned  with  a  discussion  of  the 
validity  of  the  principle  of  standardization 
and  an  estimate  of  the  possibility  of  its  ap- 
plication in  future  arbitration  proceedings. 

It  is  unnecessary  to  enumerate  in  detail 

^  Eastern  Conductors  and  Trainmen's  Arbitration  (1913),  Re- 
port of  Board,  pp.  15-16. 

2  Ibid.,  Report  of  Board,  p.  5. 


40    DETERMINATION  OF  RAILWAY  WAGES 

the  advantages  of  system  standardization; 
the  payment  of  standard  piece  scales  within 
a  local  area  is  the  practice  in  many  trades, 
and  also  upon  many  railways,  and  these 
applications  of  the  principle  demonstrate 
its  practicability  and  success.  ^  The  chief 
objection  is  that  the  standard  rate  tends  to 
become  the  maximum  rate  paid,  and  that 
this  tendency  results  in  a  uniform  wage  to 
efficient  and  inefficient  workmen.  It  is  true 
that  the  existing  rates  higher  than  the  stand- 
ard retained  through  the  saving  clause  are 
merely  temporary;  and  that  the  upward 
movement  of  standardization  will  ultimately 
result  in  the  gradual  rise  of  the  present  stand- 
ard to  the  maximum  now  existing,  thus  pro- 
viding one  uniform  standard  for  all  employees 
of  a  certain  grade  in  a  given  service.  Under 
such  a  system  of  wage  payment,  it  is  certain 
that  some  more  capable  men  will  receive  the 
same  rate  of  compensation  as  that  paid  to 
inferior  employees.  But  there  is  likely  to  be 
even  more  unfairness  where  lack  of  a  def- 
inite level  below  which  employers  may  not 
grade  their  men  permits  the  payment  of  in- 
sufficient wages. 

On  the  railways,  where  mileage  is  the  basis 
of  payment,  the  danger  of  uniformity  in  com- 

1  D.  A.  McCabe,  "Standard  Rate  in  American  Trade  Unions," 
Johns  Hopkins  University  Studies  in  Historical  and  Political  Sci- 
ence, Vol.  XXX,  pp.  120-128.  141-142. 


STANDARDIZATION  41 

pensatlon  is  largely  obviated  by  giving  more 
advantageous  runs  to  older  and  tried  em- 
ployees. Furthermore,  the  graduated  stand- 
ard rate  proposed  by  the  men  and  awarded 
by  a  number  of  boards  provides  for  a  defi- 
nite payment  above  the  standard  to  those 
operating  locomotives  which  require  greater 
labor  in  handling  and  involve  more  risk  and 
responsibility.  Weight  on  drivers,  the  crite- 
rion ordinarily  awarded  by  the  boards,  has 
been  criticized  by  the  railways  on  the  ground 
that  it  is  not  a  proper  index  of  tractive  power. 
Any  criterion  selected  to  measure  increased 
efficiency,  labor,  or  responsibility  attending 
the  operation  of  larger  locomotives  is  certain 
to  be  more  or  less  arbitrary.  The  important 
consideration  appears  to  be  uniformity  of 
application  and  continued  use  of  a  certain 
criterion,  once  it  has  been  selected.  The 
claim  of  the  railways,  therefore,  that  the 
standard  results  in  a  uniform  wage  must  be 
disallowed,  for  the  graduated  standard  as- 
sures definite  payment  above  that  level,  and 
thus  refutes  one  of  the  most  serious  charges 
against  the  standard  rate. 

The  objection  of  the  railways  to  the  sav- 
ing clause  on  the  ground  that  it  defeats  uni- 
formity is  inconsistent  with  their  objection 
to  uniformity  on  the  ground  that  it  does  not 
permit  the  employers  to  pay  wages  above 


42    DETERMINATION  OF  RAILWAY  WAGES 

the  standard  to  more  efBcient  men.  Like  the 
graduated  standard  rate,  the  saving  clause, 
by  retaining  rates  higher  than  the  standard 
proposed,  secures  payment  above  the  mini- 
mum level.  -  There  is  no  reason  why  higher 
paid  employees  should  lower  their  standard 
of  living  in  order  that  the  railways  may  find 
it  easier  to  pay  adequate  wages  to  the  less 
fortunate  workmen.  Since  the  granting  of 
a  standard  rate  does  not  of  necessity  imply  a 
uniform  rate  to  all  employees  of  a  given  grade, 
there  is  nothing  in  the  saving  clause,  which 
preserves  rates  higher  than  the  standard, 
contrary  to  the  theory  of  a  standard  rate.^ 

Finally,  the  standard  rate  is  inevitable 
where  collective  bargaining  is  the  practice. 
Committees  of  the  employees  and  of  the  rail- 
ways, government  mediators,  or  arbitration 
boards  are  confronted  with  the  problem  of 
determining  the  amount  due  to  each  employee 
of  the  grade  of  employment  concerned.  The 
mere  number  of  workmen  employed  on  a 
single  road  or  system  renders  the  determina- 
tion of  a  rate  for  each  individual  an  utter 

^  It  should  be  emphasized,  however,  that  the  higher  rates  main- 
tained by  the  saving  clause  are,  in  all  likelihood,  merely  temporary. 
It  is  only  a  question  of  time  before  the  standard  is  gradually  raised 
to  the  level  of  the  highest  existing  rate,  and  then,  barring  those 
grades  of  employment  in  which  the  graduated  standard  is  paid,  one 
uniform  standard  will  be  paid  to  all  emploj'ees  of  a  certain  grade 
in  the  same  class  of  service.  Where  this  condition  is  brought  about 
there  will  be  no  more  need  for  the  saving  clause. 


STANDARDIZATION  43 

impossibility.  The  body  fixing  the  rates  may 
be  convinced  that  the  various  physical  and 
trafiic  peculiarities  on  the  particular  road 
should  be  reflected  in  the  rate  of  pay,  but  it 
is  forced  to  recognize  its  inability  to  deter- 
mine for  each  employee  separately  the  amount 
commensurate  with  the  labor  involved  in  the 
particular  kind  of  work  which  he  performs. 
Any  attempt  to  determine  for  each  laborer 
the  exact  quantitative  relation  between  the 
rate  of  pay  and  such  elements  as  the  num- 
ber of  tracks  on  the  division,  the  percentage 
of  curves  and  grades,  or  the  number  of  pas- 
sengers and  tons  of  freight  hauled  would  re- 
quire an  attention  to  detail  and  a  nicety  of 
calculation  attainable  only  by  the  method  of 
individual  bargaining.  Collective  bargaining, 
which  is  here  to  stay,  admits  of  no  such  ex- 
act fixing  of  rates,  and  the  committee  or  board 
must  have  recourse  to  the  only  alternative, 
the  establishment  of  a  standard  rate,  a  level 
from  which  all  employees  are  to  start. 

The  influence  of  the  form  of  wage  bargain- 
ing upon  the  system  of  wages  is  even  more 
marked  in  the  case  of  district  than  in  system 
standardization.  The  concerted  movement 
was  introduced  to  force  the  railways  to  pay 
a  standard  rate  throughout  the  district  re- 
gardless of  the  differences  between  the  roads. 


44    DETERMINATION  OF  RAILWAY  WAGES 

This  was  to  be  accomplished  by  uniting  and 
bringing  the  full  power  of  the  employees  to 
bear  upon  the  railw^ays.    The  power  of  the 
railway  brotherhoods,  however,  has  not  forced 
the  payment  of  a  standard  rate  in  the  East, 
West,  and  South;  the  form  of  wage  bargain- 
ing has  accomplished  this  result.   When  col- 
lective bargaining  is  conducted  on  the  scale 
of  the  railway  concerted  movements,  which 
include  ordinarily  from  thirty  thousand  to  a 
hundred  thousand  men  working  perhaps  on 
fifty  railroads,  it  is  impossible  for  the  body 
fixing  w^ages  to  associate  rates  with  the  in- 
numerable' varying   conditions   on   the  dif- 
ferent roads.  The  determination  of  the  wages 
of  this  army  of  employees  lies  in  the  hands 
of    a    small    body  —  an    arbitration    board, 
several  mediators,  or  a  committee  represent- 
ing the  employees  and  railways  —  and  the 
decision   must   be   rendered   within   a   brief 
period.  Under  such  conditions  it  is  impossible 
for  the  board  to  consider  the  different  roads 
separately,  and  it  is  forced  to  disregard  vary- 
ing physical  and  traffic  conditions,  and  to 
provide  a  standard  rate  applicable  uniformly 
to  all  the  roads  within  the  district.  The  suc- 
cess and  convenience  of  the  concerted  move- 
ment as  a  metliod  of  wage  bargaining  warrant 
the  assumption  that  it  will  be  continued,  and 
if  so,  district  standardization  is  inevitable. 


STANDARDIZATION  45 

Just  as  it  is  necessary  for  arbitration  boards 
to  disregard  the  different  physical  and  traffic 
conditions  of  individual  roads,  so  they  are 
forced  in  a  concerted  movement  to  consider 
the  railways  as  a  unit  and  not  to  permit  vari- 
ations in  net  earnings  between  the  roads  to 
affect  the  award  of  the  standard  rate.  The 
position  of  American  arbitration  boards  on 
this  question  is  undoubtedly  correct.  The 
numerous  ramifications  of  intercorporate  re- 
lations and  the  possibility  of  concealing  prof- 
its render  it  difficult  for  an  arbitration  board 
to  determine  whether  a  particular  road  is 
profitable  or  not,  and  for  these  reasons  it 
seems  improper  to  deny  employees  rates 
paid  on  neighboring  lines  on  the  ground  that 
the  road  concerned  is  unable  to  meet  the  in- 
creases required. 

Even  the  railways  are  recognizing  the  fu- 
tility of  this  objection  to  district  standard- 
ization. If  their  contention  were  allowed,  the 
employees  on  an  unprofitable  road  could 
never  hope  to  receive  a  reasonable  wage, 
even  assuming  that  the  rates  paid  in  the 
vicinity  were  reasonable.  There  is  no  reason 
why  an  employee  should  forego  his  claim  to 
like  pay  for  similar  service,  merely  because 
the  railroad  on  which  he  works  is  operated 
at  a  loss.  District  standardization,  therefore, 
should  not  be  refused  on  the  ground  that 


46    DETERMINATION  OF  RAILWAY  WAGES 

individual  roads  are  unable  to  pay  the  stand- 
ard of  the  district. 

District  standardization  holds  out  many 
real  advantages  to  all  parties  concerned  in 
the  settlement  of  the  wage  problem.  If  the 
employees  of  a  given  district  agree  to  the 
principle,  and  if  they  succeed  in  obtaining 
district  standardization,  every  possibility  of 
unfair  discrimination  against  them  as  regards 
wages  on  the  part  of  the  employer  is  removed. 
No  employer  will  be  permitted  to  pay  wages 
below  the  standard  set  for  the  district,  and  if 
the  organizations  of  the  men  are  powerful, 
it  is  likely  that  this  standard  will  represent 
an  adequate  wage.  The  payment  of  a  stand- 
ard rate  throughout  a  district  will  remove 
one  of  the  most  serious  causes  of  dispute  be- 
tween employers  and  employees,  and  this  will 
redound  to  the  benefit  of  the  employers  and 
the  public  in  the  lessening  of  the  number  of 
disputes  and  the  chances  of  an  interruption 
to  the  processes  of  production. 

Moreover,  district  standardization  will 
undoubtedly  facilitate  the  work  of  arbitra- 
tion boards  and  other  wage-fixing  bodies. 
As  the  employees  have  demonstrated,  the 
adoption  of  this  principle  renders  it  possible 
to  determine  with  some  exactness  what  the 
actual  advance  in  wages  within  a  given 
period  has  been.   This  will  enable  boards  to 


STANDARDIZATION  47 

ascertain  whether  wages  have  increased  the 
proper  amount,  and  will  lessen  the  chance  of 
injustice  being  done  to  both  sides  by  an  arbi- 
trary increase  in  wages.  A  uniform  standard 
throughout  a  large  district  will  also  make  the 
application  of  a  broad  general  principle  of 
wage  advance  comparatively  simple.  For 
instance,  if  the  increase  in  the  cost  of  living 
were  the  principle  determined  upon,  it  would 
be  difficult  to  estimate  the  actual  per  cent  of 
increase  in  the  cost  of  commodities  for  the 
various  incomes  resulting  from  the  wide 
diversity  of  rates.  If,  however,  a  standard 
were  in  force  throughout  a  considerable  ter- 
ritory, the  increase  in  the  cost  of  living  for 
that  income  could  be  calculated,  and  this 
per  cent  increase  applied  uniformly  to  those 
receiving  the  standard  rate. 

It  has  been  asserted  that  district  stand- 
ardization results  in  unfair  discrimination 
among  employees  and  that  "it  is  a  disregard 
of  the  individual  in  the  larger  strategic  in- 
terest of  the  organization  as  a  whole."  ^  Dr. 
F.  J.  Warne  has  answered  the  latter  state- 
ment by  saying  that  such  a  disregard  is  some- 
thing to  be  commended  rather  than  criti- 
cized, and  the  former  assertion  he  claims 
may  be  true,  but  "the  advantage  of  stand- 

*  F.  H.  Dixon,  "Public  Regulation  of  Railway  WaJ^es,"  Pro- 
ceedings of  American  Economic  Association,  1914,  p.  £50. 


48    DETERMINATION  OF  RAILWAY  WAGES 

ardization  over  any  other  method  is  that 
it  results  in  less  unfair  discrimination  —  it 
provides  a  broad  basis  from  which  all  em- 
ployees within  the  group  are  to  start."  ^  In 
one  respect,  however,  district  standardiza- 
tion may  result  in  very  real  discrimination. 
The  application  of  a  uniform  standard  over 
an  area  as  large  as  the  railway  districts  in 
which  wide  differences  in  the  cost  of  living 
exist  ^  will  cause  frequent  inequalities  in  the 
real  wages  paid  to  those  performing  similar 
work.  The  practice  in  concerted  movements 
in  the  past  has  been  to  make  no  differences 
in  rates  within  a  given  district  even  though 
living  costs  vary  greatly  between  different 
parts  of  that  district.  The  uniformity  thus 
obtained  has  been  uniformity  of  money 
rather  than  of  real  wages.  Boards  have  been 
forced  to  disregard  variations  in  cost  of  food, 
rent,  etc.,  between  different  sections,  partly 
by  reason  of  the  lack  of  adequate  statistics 
showing  the  exact  differences  in  the  cost  of 

*  Proceedings  of  American  Economic  Association,  1914,  p.  280. 

2  Differences  in  food  prices  throughout  the  United  States  are 
clearly  shown  in  the  reports  of  the  U.S.  Bureau  of  Labor  Statistics. 
Variations  between  cities  both  in  food  and  rent  costs  were  the  sub- 
ject of  special  study  by  the  British  Board  of  Trade  inquiry  into  the 
cost  of  living  in  the  United  States  made  in  1911.  The  variations 
shown  for  food  prices  were  very  wide,  from  91  for  Detroit  to  109 
for  Atlanta  (New  York  City  =  100).  Rents  showed  even  greater 
variations  —  52  for  Lowell  to  101  for  St.  Louis  (New  York  City 
rents  =  100).  See  Board  of  Trade  Inquiry  into  the  Cost  of  Living 
in  American  Towns,  1911,  Introduction,  pp.  xxv-xxvi;  xxxiv-xxxv. 


STANDARDIZATION  49 

living,  and  partly  on  account  of  their  in- 
ability in  large  concerted  movements  to 
allow  for  variations  in  living  costs  in  the 
rates.  It  seems,  however,  that  differences 
in  the  cost  of  living  between  various  sections 
of  a  district  should  be  allowed  to  affect  rates, 
for  a  standard  rate  of  an  absolute  amount, 
where  there  are  wide  diversities  in  living 
costs,  will  accomplish  only  apparent  stand- 
ardization. It  is  recognized  that  there  are 
many  difficulties  attending  the  carrying  out 
of  this  policy;  but  some  general  rule  for  dif- 
ferences in  the  cost  of  living  may  be  applied, 
such  as  that  suggested  by  Sidney  and  Bea- 
trice Webb,  in  which  a  uniform  standard  rate 
is  to  be  varied  by  a  percentage  increase  for 
cities  and  a  percentage  decrease  for  purely 
agricultural  districts,  the  assumption  being 
that  differences  in  the  cost  of  living  between 
sections  resolve  themselves  into  differences 
in  rents  —  city  rents  being  higher  than  coun- 
try rents. ^  On  some  such  broad,  general  rule, 
differences  in  living  costs  may  be  roughly 
reflected  in  the  standard  rate  paid  within  a 
given  district. 

One  of  the  counsel  for  the  Western  roads 
in  the  Engineers  and  Firemen's  Arbitration 
in  1915  stated  that  the  West  and  the  East 

*  Webb,  Industrial  Democracy  (1902  ed.),  p.  321. 


50    DETERMINATION  OF  RAILWAY  WAGES 

were  gradually  approaching  each  other  in 
the  matter  of  wages.  In  pioneer  days,  when 
the  West  was  sparsely  settled,  when  condi- 
tions of  living  were  unfavorable  and  when  the 
cost  of  living  was  higher,  rates  of  wages  of  all 
laborers  were  greater  in  the  West  than  in  the 
East.  At  the  present  time,  however,  he  said, 
the  old  hardships  were  disappearing,  condi- 
tions surrounding  life  were  practically  the 
same  East  and  West;  wages  in  all  employ- 
ments, and  the  cost  of  food,  rents,  fuel  and 
light  in  the  East  were  more  and  more  ap- 
proaching the  level  of  the  West.  Therefore, 
"there  is  not  a  disparity  in  conditions  that 
would  justify  the  payment  of  a  different 
minimum  wage  in  the  West  from  the  mini- 
mum fixed  in  the  East."  ^  This  statement 
may  be  true;  but  the  fact  remains  that,  at 
the  present  time,  wages  in  almost  all  occupa- 
tions are  higher  in  the  West  than  in  the  East.^ 
The  very  existence  of  such  a  differential  in 
favor  of  the  West  is  ample  justification  for 
refusing  the  award  of  a  standard  rate  in  the 
East  equal  to  that  paid  in  the  West.  It  is 
likely,  however,  that  conditions  are  gradu- 
ally becoming  uniform  in  these  two  sections 
of  the  country,  and,  therefore,  the  suggestion 
of  the  Eastern  Conductors  and  Trainmen's 

^  Western  Engineers  and  Firemen's  Arbitration  (1915),  Proceed- 
ings, pp.  7586-7588. 
'  Scott  Nearing,  Wages  in  the  United  States,  pp.  108,  156. 


STANDARDIZATION  61 

Board  (1913)  relating  to  the  establishment  of 
a  board  of  inquiry  is  much  to  the  point.  It 
was  suggested  that  Congress  should  authorize 
a  commission  to  examine  conditions  in  the 
two  areas,  and  if  it  were  found  that  a  higher 
wage  in  the  West  were  justified  the  commis- 
sion should  determine  the  amount  of  this 
differential.  Such  a  board  of  inquiry  should 
include  representatives  of  the  employers  and 
the  employees,  and  the  findings  should  not 
be  confined  to  the  railway  situation  only,  but 
embrace  enough  industries  to  make  possible 
the  definitive  settlement  of  this  phase  of  the 
wage  problem  for  all  employees. 

The  Eastern  Conductors  and  Trainmen's 
Board  was  undoubtedly  justified,  also,  in  its 
refusal  to  standardize  rates  East  and  West 
by  the  lack  of  agreement  among  the  em- 
ployees in  these  two  districts  regarding  na- 
tional standardization.  It  is  natural  for 
workmen  in  the  West  to  desire  as  high  wages 
as  possible,  and  to  use  the  increases  in  the 
East  as  a  basis  for  their  wage  demands. 
Similarly,  it  is  natural  for  workmen  in  the 
East  to  demand  the  Western  rates.  This 
practice,  however,  can  only  result  in  con- 
tinuous wage  requests,  with  evil  effects  upon 
employers  and  employees.  Before  it  is  pos- 
sible to  equalize  the  rates  East  and  West,  it 
is  manifestly  necessary  for  the  employees  in 


52    DETERMINATION  OF  RAILWAY  WAGES 

the  two  districts  to  agree  to  stand  for  na- 
tional uniformity,  and  not  to  employ  the 
"endless  chain"  method  of  obtaining  in- 
creases. In  the  Eastern  Conductors  and 
Trainmen's  Arbitration,  Mr.  Garretson  stated 
that  the  Conductors  were  willing  to  take  such 
a  step;  but,  so  far  as  is  known,  the  other  or- 
ganizations have  not  agreed  to  the  principle 
of  national  standardization.^ 

If  a  commission  of  inquiry  reported  that 
there  were  no  essential  territorial  differ- 
ences in  wages  between  the  East  and  West, 
and  if  the  employees  in  the  West  accepted 
the  principle  of  national  uniformity,  there 
would  be  no  justification  for  an  arbitration 
board  to  refuse  the  absolute  equalization  of 
rates  East  and  West,  except  on  the  ground 
that  mountainous  districts  in  the  West  re- 
quired greater  wages  and  that  the  cost  of 
living  varied  considerably  throughout  the 
country.  As  far  as  possible,  both  in  the  appli- 
cation of  district  and  national  standardiza- 
tion, variations  in  the  cost  of  living  should  be 
reflected  in  wages,  the  ideal  being  the  equal- 
ity of  real  wages  rather  than  absolute  equal- 
ity. It  is  not  likely,  however,  that  national 
standardization  will  be  secured  until  collec- 
tive bargaining  is  extended  so  as  to  determine 

*  Eastern  Conductors  and  Trainmen's  Arbitration  (1913),  Pro- 
ceedings, p.  1983. 


STANDARDIZATION  53 

in  one  wage  movement  the  rates  to  be  ap- 
plied throughout  the  country.  When  the 
district  concerted  movement  becomes  a  na- 
tional concerted  movement,  then  the  forces 
which  made  district  standardization  in  the 
railway  industry  inevitable  will  accomplish 
national  standardization. 

The  principle  of  national  standardization 
has  many  advantages.  Employers  will  be 
spared  the  annoyance  of  numerous  local  ad- 
justments. Employees  will  receive  a  national 
standard  rate,  and  the  power  of  the  national 
unions  will  be  sufficient  to  make  this  stand- 
ard an  adequate  one.  The  settlement  of 
wages  on  a  national  scale  will  make  employ- 
ees chary  of  presenting  wage  demands  based 
upon  trivial  grounds,  and  the  responsibility 
of  those  involved  in  the  settlement  of  wages 
will  be  so  great  on  account  of  the  public  ef- 
fect of  an  open  breach,  that  resort  to  strikes 
will  become  more  and  more  infrequent.^  In 
spite  of  these  advantages,  however,  no  step  can 
well  be  taken  to  further  national  standardiza- 
tion until  a  competent  commission  reports  upon 
the  similarity  of  conditions  East  and  West; 
and  employees  throughout  the  country  form- 
ally commit  themselves  to  this  policy,  and  unite 
in  nation-wide  concerted  movements  with  the 
national  uniformity  of  real  wages  in  view. 

»  Railway  Age  Gazette,  Vol.  l,  No.  16,  pp.  934-935. 


CHAPTER  II 

THE  LIVING  WAGE 

The  principle  of  standardization  has  been 
one  of  the  most  effective  means  of  wage  ad- 
vance employed  by  the  highly  skilled  and 
strongly  organized  grades  of  railway  labor. 
The  weaker  railway  labor  organizations,  how- 
ever, have  been  unable  to  cope  with  the  roads 
by  means  of  the  concerted  movement,  and, 
therefore,  standardization  has  rarely  fig- 
ured in  the  demands  of  the  employees  out- 
side of  the  four  train-service  brotherhoods. 
In  spite  of  this  handicap,  the  unskilled  and 
poorly  organized  workmen  have  conducted 
vigorous  movements  for  wage  advance.  The 
principle  upon  which  their  wage  demands 
have  been  chiefly  based  has  been  that  of  the 
living  wage. 

In  the  treatment  of  wages,  much  confusion 
has  resulted  from  the  inaccurate  use  of  such 
terms  as  the  minimum  of  subsistence,  the 
living  wage,  the  normal  standard  of  living, 
and  the  standard  of  living.  At  the  outset, 
therefore,  it  will  be  necessary  to  draw  a  clear 
line  of  demarcation  between  these  expres- 
sions and  to  set  forth  the  meaning  attached  to 
them  in  the  following  pages. 


THE  LIVING  WAGE  55 

A  wage  suflScient  to  secure  the  minimum  of 
subsistence  is  one  which  is  capable  of  ob- 
taining for  its  recipient  at  the  existing  prices 
of  commodities  the  bare  necessities  of  hfe  — 
the  minimum  of  food,  shelter,  clothing,  fuel 
and  light  —  required  to  keep  the  laborer  and 
his  family  alive.  Above  this  minimum  of 
subsistence  lies  what  is  commonly  known  as 
the  normal  standard  of  living,  which  com- 
prehends much  more  than  the  mere  minimum 
of  subsistence.  It  includes  the  quantity  and 
quality  of  food  consumed  by  the  average 
laborer,  sanitary  living  quarters,  adequate 
clothing,  fuel  and  light,  and  in  addition,  a 
provision  for  recreation,  medical  attendance, 
and  a  small  amount  of  savings.  The  wage 
required  to  secure  this  normal  standard  of 
living  is  called  the  living  wage. 

It  has  always  been  recognized,  however, 
that  in  certain  occupations,  by  reason  of  the 
superior  skill,  responsibility,  and  hazard  in- 
volved, the  laborers  are  entitled  to  compen- 
sation in  excess  of  the  amount  necessary  to 
secure  the  minimum  of  subsistence  or  the 
normal  standard  of  living.  There  have  thus 
developed  among  the  whole  mass  of  laborers 
certain  strata  of  living  standards,  dependent, 
in  the  main,  upon  the  size  of  the  income  and 
the  prices  of  commodities,  the  state  of  civil- 
ization existing  in  the  country  at  the  partic- 


56    DETERMINATION  OF  RAILWAY  WAGES 

ular  time,  the  class  of  society  to  which  the 
individual  belongs,  and  his  ability  to  distrib- 
ute the  income  wisely  and  to  get  the  most 
out  of  the  amount  received.  These  strata  are 
called  standards  of  living.  For  each  occupa- 
tion within  a  given  industry,  then,  there  is 
a  certain,  vaguely  defined  scale  of  comfort 
which  each  worker  at  that  particular  occupa- 
tion considers  as  his  right.  It  is  proper, 
therefore,  to  speak  of  the  standard  of  living 
of  the  locomotive  engineers  as  an  entirely 
separate  and  distinct  scale  of  comfort  from 
that  enjoyed  by  the  conductors  or  firemen. 

With  these  grades  of  railway  labor,  there 
is  no  doubt  that  the  wage  received  is  con- 
siderably in  excess  of  the  living  wage  or  of 
that  required  to  obtain  the  minimum  of  sub- 
sistence. Among  other  grades  of  railway 
labor,  however,  which  do  not  have  the  skill, 
risk,  and  responsibility  of  the  engineers  or  con- 
ductors and  where  the  wage  in  consequence 
is  much  lower,  there  is  a  conviction  that  the 
wage  received  is  insufficient  to  secure  the 
normal  standard  of  living.  These  employees 
consider  that  standard  as  their  right,  and  they 
demand  increases  in  wages  of  such  an  amount 
as  to  bring  their  compensation  to  the  living- 
wage  level. 

By  a  living  wage  the  railway  employees 
imply  compensation   sufficient   to  purchase 


THE  LIVING  WAGE  57 

the  food  necessary  for  health  and  efficiency; 
to  enable  the  employee  to  have  his  own  home; 
to  keep  his  children  from  working  at  an  early 
age  so  that  they  may  receive  proper  educa- 
tion; and  to  lay  up  a  competence  for  his  old 
age.  The  amount  and  quality  of  food  and  the 
home  surroundings  are  to  be  governed  by 
American  standards,  and  not  by  comparison 
with  foreign  laborers  who  are  accustomed  to 
a  lower  standard  of  living  than  that  of  the 
average  unskilled  American  workman.^  Both 
in  Canada  and  in  the  United  States  the 
lower-paid  employees  on  the  railways  have 
made  frequent  appeals  to  arbitration  boards 
to  grant  a  living  wage.  In  a  number  of  dis- 
putes, the  living  wage  has  been  the  specific 
basis  of  the  employees'  demands;  in  others, 
this  basis  has  been  implied,  since  the  men 
involved  were  already  receiving  compensa- 
tion equivalent  to  the  commonly  estimated 
amount  of  the  living  wage,  but  were  demand- 
ing an  increase  based  on  the  advanced  cost 
of  living,  clearly  with  the  purpose  of  keeping 
the  "real"  living  wage  intact. 

In  the  arbitration  of  1914,  involving  the 
New  York,  Chicago,  and  St.  Louis  Railway 
("Nickel  Plate")  and  the  Telegraphers,  Sig- 
nalmen, and  Station  Agents,  the  employees' 

^  Western  Engineers  and  Firemen's  Arbitration  (1915),  Proceed- 
ings, p.  7774;  Locomotive  Engiiieers'  Magazine,  June,  1912,  p.  569. 


58    DETERMINATION  OF  RAILWAY  WAGES 

representative  laid  particular  stress  upon  the 
necessity  of  paying  a  living  wage  to  the  men, 
and  expressed  willingness  to  waive  every 
other  basis  for  advanced  wages  and  to  rest 
his  entire  argument  on  the  principle  of  the 
living  wage.*  In  the  Wheeling  and  Lake 
Erie  Arbitration  (1914)  concerning  compen- 
sation of  telegraphers,  telephoners,  signal- 
men, and  station  agents  on  three  railways, 
the  men  argued  that  the  minimum  of  $55 
monthly  was  inadequate  and  that  at  least 
$65  was  required  to  obtain  a  decent  liveli- 
hood for  an  employee  and  his  family.'^  In 
Canada,  the  maintenance  of  way  employees 
have  been  the  most  energetic  of  the  lower- 
paid  men  in  demanding  increases.  In  1911 
these  employees  conducted  a  successful  move- 
ment on  the  Canadian  Pacific,  the  Canadian 
Northern,  and  the  Grand  Trunk  Pacific, 
basing  their  demands  in  each  case  upon  the 
principle  of  the  living  wage.^  Again  in  1913- 
1914  the  same  grade  of  employees  on  the 
Canadian  Pacific,  the  Canadian  Northern, 
the  Grand  Trunk,  and  the  Grand  Trunk 
Pacific  applied  for  further  increases,  the 
men's  representative  in  the  first  dispute  claim- 

1  "Nickel  Plate"  Arbitration  (1914),  Proceedings,  pp.  129,  136. 

2  Wheeling  and  Lake  Erie,  etc..  Arbitration  (1914),  Proceedings, 
pp.  135-141. 

'  Department  of  Labour  (Canada),  Annual  Report,  1911,  Ap- 
pendix, pp.  221-247,  248-254,  255-274. 


THE  LIVING  WAGE  59 

ing  that  the  employees  should  receive  a  mini- 
mum wage  measured  by  "the  necessary 
amount  required  to  live  on."  ^  In  several 
Canadian  cases  where  the  roads  were  paying 
wages  lower  than  in  other  localities,  the  em- 
ployees claimed  that  since  there  were  no 
differences  between  these  localities  in  respect 
to  the  cost  of  living,  the  wages  should  be  the 
same.^ 

The  number  of  cases  in  Canada  in  which 
the  employees  have  specifically  or  impliedly 
based  their  demands  on  the  principle  of  a 
living  wage  is  greater  than  in  the  United 
States,^  for  in  the  latter,  the  railway  arbitra- 

^  Canadian  Pacific  vs.  Maintenance  of  Way  Employees,  Labour 
Gazette  (Canada),  February,  1914,  p.  912;  Grand  Trunk  Pacific 
vs.  Maintenance  of  Way  Employees,  ibid.,  March,  1914,  pp.  1055- 
1056;  Grand  Trunk  vs.  Maintenance  of  Way  Employees,  ibid.,  Octo- 
ber, 1913,  pp.  430-442;  Canadian  Northern  vs.  Maintenance  of  Way 
Employees,  Department  of  Labour  (Canada),  Annual  Report, 
1915,  Appendix,  pp.  102-105. 

2  Canadian  Pacific  vs.  Freight  Handlers  (1909),  Department  of 
Labour  (Canada),  Annual  Report,  1910,  Appendix,  pp.  166-174; 
Michigan  Central  vs.  Telegraphers,  ibid.,  1912,  Appendix,  pp.  128- 
137. 

'  Other  United  States  cases:  (1910),  Baltimore  and  Ohio  South- 
western vs.  Telegraphers;  Southern  Railway  vs.  Telegraphers; 
Missouri  Pacific  vs.  Telegraphers;  "Big  Four"  vs.  Telegraphers; 
(1913),  Southern  Railway  vs.  Maintenance  of  Way  Employees; 
(1914),  Wheeling  and  Lake  Erie,  etc.,  vs.  Telegraphers;  "Nickel 
Plate"  vs.  Telegraphers.  In  Canada,  the  following  cases  may  be 
cited :  (1908),  Grand  Trunk  vs.  Telegraphers;  Canadian  Northern 
vs.  Engineers;  (1909),  Canadian  Pacific  vs.  Freight  Handlers;  Cana- 
dian Northern  vs.  Maintenance  of  Way  Employees;  (1911),  Grand 
Trunk  vs.  Machinists;  Canadian  Northern,  Canadian  Pacific,  and 
Grand  Trunk  Pacific  vs.  Maintenance  of  Way  Employees;  (1912), 
Canadian  Pacific  vs.  Telegraphers  and  Station  Agents;    (1913), 


60    DETERMINATION  OF  RAILWAY  WAGES 

tion  laws  apply  only  to  those  actually  en- 
gaged in  the  movement  of  trains,  whereas  in 
Canada  the  Industrial  Disputes  Investiga- 
tion Act  applies  to  all  employees  working  in 
public  or  quasi-public  utilities.  In  the  United 
States  of  the  lower-paid  grades  only  the 
telegraphers,  telephoners,  signalmen,  station 
agents,  and  maintenance  of  way  employees 
have  been  affected  by  the  Erdman  and  New- 
lands  Acts;  in  Canada,  however,  in  addition 
to  the  above  grades  of  employment,  such 
others  as  the  freight  handlers,  machinists  and 
shopmen,  carmen,  helpers,  etc.,  have  had 
their  wages  adjusted  under  the  Dominion 
law,  and  have  based  their  demands  on  the 
necessity  of  receiving  a  living  wage. 

In  reply  to  the  demands  of  the  employees 
for  a  living  wage,  the  railways  offer  no  serious 
objection.  Opinion  may  differ  as  to  the  amount 
required  to  support  a  laborer  and  his  family 
according  to  the  standard  which  he  considers 
his  right,  but  the  principle  involved,  namely, 
that  the  employee  should  receive  a  wage 
adequate  to  satisfy  mere  subsistence  wants, 
plus  certain  conveniences  and  luxuries,  is 
generally  upheld  by  railway  officials.  The 
roads,  however,  have  objected  on  two  grounds 
to  an  increase  in  the  compensation  of  low- 
Grand  Trunk  vs.  Maintenance  of  Way  Employees;  (1914),  Canadian 
Northern,  Canadian  Pacific,  and  Grand  Trunk  Pacific  vs.  Main- 
tenance of  Way  Employees. 


THE  LIVING  WAGE  61 

paid  men  to  the  standards  demanded.  For 
instance,  in  the  *' Nickel  Plate"  Arbitration 
(1914),  the  road  contended  that  the  wage 
paid  to  telegraphers  and  station  agents  was 
just  and  reasonable  because  it  compared 
favorably  with  the  amount  of  compensation 
received  for  similar  work  on  other  lines  in  the 
neighboring  district.^  This  has  been  the  claim 
of  the  employers  in  almost  every  arbitration 
in  Canada  and  in  the  United  States  in  which 
one  road  only  has  been  involved.  There  is 
no  attempt  to  prove  that  the  rate  paid  is 
sufficient;  if  the  road  is  paying  the  customary 
going  rate  in  that  particular  neighborhood, 
it  is  assumed  that  that  amount  of  compensa- 
tion is  just  and  equitable. 

Another  objection  made  to  any  increase 
in  compensation  is  that,  as  the  margin  be- 
tween gross  income  and  gross  expenditures 
is  already  so  narrow,  any  increase  in  fixed 
charges  occasioned  by  an  advance  in  wages 
will  result  either  in  bankruptcy  or  in  the  ne- 
cessity of  applying  to  rate-regulating  bodies 
for  freight  and  passenger  rate  advances.^ 
This  inability  of  the  road  to  pay  increases 

1  "Nickel  Plate"  Arbitration  (1914),  Proceedings,  pp.  388,  393. 

*  Illinois  Central  Ry.,  etc.,  vs.  Telegraphers  (1910),  Records, 
U.S.  Board  of  Mediation  and  Conciliation,  File  No.  18;  Wheeling 
and  Lake  Erie,  etc.  Arbitration  (1914),  Proceedings,  pp.  309-310; 
"Nickel  Plate"  Arbitration  (1914),  Proceedings,  pp.  385-386; 
389;  392-393;  "Big  Four"  Arbitration  (1910),  Records,  U.S.  Board 
of  Mediation  and  Conciliation,  File  No.  26. 


62    DETERMINATION  OF  RAILWAY  WAGES 

may  arise  from  the  chronic  unprofitableness 
of  the  particular  road  on  account  of  the  un- 
developed or  backward  state  of  the  territory- 
traversed,  the  necessity  of  large  expenditures 
for  upkeep  due  to  the  peculiar  physical  con- 
dition of  the  country  through  which  the  road 
passes,  etc.;  or  from  some  temporary  in- 
fluence, such  as  general  business  depression, 
which  tends  to  reduce  earnings  and  cut  down 
the  margin  between  earnings  and  expenses.^ 
The  usual  position  of  the  railways  is  that, 
since  they  are  paying  customary  rates,  these 
are  to  be  assumed  equivalent  to  a  living  wage, 
and,  provided  this  assumption  be  true,  an 
increase  should  be  refused  if  the  road  is  un- 
profitable, either  on  account  of  permanent 
conditions,  or  by  reason  of  general  business 
depression.  They  admit,  however,  that  a 
living  wage  should  be  paid.^ 

Numerous  arbitration  boards,  both  in 
Canada  and  in  the  United  States,  have  favored 
the  payment  of  a  living  wage  during  times  of 
normal  business  activity  without  regard  to 
the  ability  of  the  road  to  pay.  In  the  "Nickel 
Plate"  and  in  the  Wheeling  and  Lake  Erie 
Arbitrations    (1914)    the  boards  imposed  a 

^  Canadian  Northern  vs.  Maintenance  of  Way  Employees  (1914), 
Report,  Registrar  of  Boards  of  Conciliation  and  Investigation, 
1915,  pp.  102-105;  Canadian  Pacific  vs.  Maintenance  of  Way  Em- 
ployees (1914),  in  Labour  Gazette  (Canada),  February,  1914,  p.  904. 

^  Chicago,  Burlington  and  Quincy  Arbitration  (1914),  Proceed- 
ings, p.  9577. 


THE  LIVING  WAGE  63 

minimum  of  $65  a  month  for  telegraphers  and 
station  agents  on  the  New  York,  Chicago 
and  St.  Louis,  Wheehng  and  Lake  Erie, 
Wabash,  Pittsburgh  Terminal,  and  West 
Side  Belt  Railways.^  The  telegraphers  on 
the  Missouri  Pacific  were  also  granted  a  liv- 
ing wage  in  1910.^  All  the  above-mentioned 
roads  argued  that  they  were  unable  to  make 
any  advances  in  pay,  and  several  of  them 
were  in  the  hands  of  receivers  at  the  time  of 
the  wage  increase.  In  Canada,  the  main- 
tenance of  way  employees  on  the  Grand 
Trunk  Pacific,  Canadian  Pacific,  and  Cana- 
dian Northern  received  increases  in  1911  in 
face  of  a  vigorous  statement  on  the  part  of 
the  roads  that  their  financial  condition  did 
not  warrant  any  advance  in  wages.  ^  In  the 
case  of  the  Canadian  Pacific  Railway  against 
its  telegraphers  and  station  agents  in  1912, 
the  board  recommended  a  ten  per  cent  in- 
crease to  be  distributed  with  regard  to  the 
personal  and  family  necessities  of  the  recip- 
ient, to  the  location,  and  other  advantages 
and  disadvantages.  The  board  held  that  the 
"...  amount    of   work   done,    the   cost   for 

1  "Nickel  Plate"  Arbitration  (1914),  Report  of  Board,  p.  723. 

'  Missouri  Pacific  Arbitration  (1910),  Report  of  Board,  p.  2. 

'  Canadian  Pacific  vs.  Maintenance  of  Way  Employees  (1911), 
Report,  Registrar  of  Boards  of  Conciliation  and  Investigation,  1911, 
pp.  221-247;  Grand  Trunk  Pacific  vs.  Maintenance  of  Way  Em- 
ployees (1911),  ibid.,  pp.  248-254;  Canadian  Northern  vs.  Main- 
tenance of  Way  Employees  (1911),  ibid.,  pp.  255-274. 


64    DETERMINATION  OF  RAILWAY  WAGES 

house  rent,  etc.,  and  the  number  of  the  recip- 
ient's family  ought  to  govern  the  distribu- 
tion." 1 

In  several  Canadian  cases,  however,  the 
inability  of  the  roads  to  pay  was  permitted  to 
reduce  the  full  demands  of  the  employees, 
although  the  living-wage  principle  was  speci- 
fically recognized.  The  board  in  the  dispute 
between  the  Canadian  Northern  and  its  en- 
gineers found  that  these  employees  were  not 
receiving  a  living  wage,  and  therefore  au- 
thorized an  increase,  with  the  condition, 
however,  that  the  men's  demands  should  not 
be  granted  in  entirety  in  view  of  the  circum- 
stances of  the  company.^  Again,  in  the  set- 
tlement of  the  dispute  between  the  Grand 
Trunk  Railway  and  the  telegraphers,  the  full 
increases  demanded  were  not  recommended, 
the  board  stating,  however,  that  the  right  of 
the  men  to  receive  a  living  wage  is  para- 
mount.^ 

The  report  of  the  board  constituted  to  de- 
cide upon  the  wages  of  the  maintenance  of 
way  employees  on  the  Southern  Railway  is 
particularly    important    because    the    whole 

^  Canadian  Pacific  vs.  Telegraphers  and  Station  Agents  (1912), 
Report,  Registrar  of  Boards  of  Conciliation  and  Investigation, 
1913,  pp.  85-95. 

^  Canadian  Northern  ps.  Engineers  (1908),  Department  of  Labour 
(Canada),  Annual  Report,  1909,  Appendix,  pp.  293-305. 

'  Grand  Trunk  vs.  Telegraphers  (1908),  Department  of  Labour 
(Canada),  Annual  Report,  1909,  Appendix,  pp.  359-360. 


THE  LIVING  WAGE  65 

question  of  the  living  wage  was  considered 
from  all  possible  viewpoints.  The  chairman 
held  that  every  workman  was  entitled  to  a 
living  wage.^  An  attempt  was  made  to  com- 
pute the  increase  in  the  cost  of  living  and  in 
wages  between  two  definite  years,  the  re- 
sult showing  that  the  advance  in  wages  had 
kept  pace  with  the  advance  in  the  costs  of 
commodities  and,  therefore,  that  no  increase 
in  wages  was  due  on  that  account.  The 
board  then  took  the  railway  point  of  view 
that  the  test  of  the  adequacy  of  wages  was 
*'.  .  .  a  comparison  with  labor  on  other  rail- 
roads where  duties  are  the  same  and  classi- 
fications nearly  identical."  ^  That  is  to  say, 
wages  on  other  lines  were  assumed  to  be  liv- 
ing wages.  The  result  of  this  comparison 
showed  that  six  roads  paid  higher  wages  and 
five  roads  lower  than  those  paid  on  the  South- 
ern.^ Considering  the  financial  straits  of  the 
road,  the  board  felt  that  it  was  not  at  liberty 
to  impose  the  highest  rates  existing  in  the 
same  territory,  but  only  a  fair  average.*  This 
average  was  found  to  be  equivalent  to  the 
average  already  paid  on  the  Southern;  there- 
fore, the  board  felt  justified  in  refusing  an  in- 
crease in  wages. ^    Thus,  in  this  arbitration, 

^  Southern  Railway  Arbitration  (1914),  Proceedings,  pp.  10-11. 

2  Ibid.,  Report  of  Board,  p.  14. 

3  Ihid.,  Report  of  Board,  pp.  21-23. 

*  Ibid.,  Report  of  Board,  p.  6.       ^  Ibid.,  Report  of  Board,  p.  23. 


66    DETERMINATION  OF  RAILWAY  WAGES 

the  board  upheld  the  principle  of  a  living 
wage,  but  determined  the  amount  of  that 
wage  by  comparison  with  other  roads,  and 
refused  to  increase  wages  on  the  ground  of 
the  inability  of  the  Southern  to  pay,  although 
six  other  roads  in  the  territory  were  paying 
higher  rates  of  compensation. 

Inability  of  the  roads  to  pay  on  account  of 
business  depression  as  an  argument  against 
an  increase  intended  to  give  a  living  wage 
found  support  in  three  recent  cases  in  Can- 
ada. The  maintenance  of  way  employees  on 
the  Grand  Trunk  Pacific,  Canadian  Pacific, 
and  Canadian  Northern  were  refused  an  in- 
crease in  the  early  part  of  1914  on  the  ground 
of  financial  stringency  pending  claims  for 
an  advance  in  freight  rates. ^  In  the  "Big 
Four"  Arbitration  (1910)  the  chairman  stated 
that  the  rates  of  pay  granted  were  not  to  be 
construed  as  giving  all  that  the  telegraphers 
might  legitimately  ask.  "The  period  of  de- 
pression from  which  business  is  just  emerging 
and  the  consequent  physical  and  financial 
conditions  of  the  railroad  have,  however, 
been  taken  into  consideration  and  on  this 
account   larger    concessions   have   been   re- 

*  Canadian  Pacific  vs.  Maintenance  of  Way  Employees  (1914), 
Labour  Gazette  (Canada),  February,  1914,  pp.  904-912;  Grand 
Trunk  Pacific  vs.  Maintenance  of  Way  Employees  (1914),  ibid., 
March,  1914,  p.  1056;  Canadian  Northern  vs.  Maintenance  of  Way 
(1914),  Report,  Registrar  Boards  of  Conciliation  and  Investigation, 
1915,  pp.  102-105. 


THE  LIVING  WAGE  67 

fused."  ^  Summing  up  the  attitude  of  Amer- 
ican arbitration  boards,  it  may  be  said  that 
they  favor  granting  a  hving  wage  to  the  lower 
paid  and  unskilled  employees,  with  a  tend- 
ency, however,  especially  in  Canada,  to  rec- 
ognize the  inability  of  the  road  to  pay  as  a  con- 
sequence of  business  depression  as  a  proper 
ground  for  reducing  in  amount  or  altogether 
refusing  advances  in  wages  properly  deducible 
from  this  principle. 

There  is  practical  agreement  nowadays 
among  students  of  social  conditions  that  no 
employee  should  receive  compensation  be- 
low an  amount  sufficient  to  secure  a  normal 
standard  of  living.^  The  opinion  is  current 
that  since  the  result  of  the  wage  contract  is 
dependent  upon  the  relative  strength  of  the 
two  parties,  and  since  the  employees  are  usu- 
ally the  weaker,  employers  should  be  limited 
in  the  exercise  of  their  superior  power  by  a 
provision  that  every  wage  must  fulfill  the 
requirements  of  a  living  wage.  It  is  unnec- 
essary to  treat  here  of  the  reasons  for  the 

^  "Big  Four"  Arbitration  (1910),  Records,  U.S.  Board  of  Media- 
tion and  Conciliation,  File  No.  26. 

^  Among  numerous  other  evidences  of  this  may  be  cited  the  dis- 
cussion following  a  presentation  by  Professor  J.  B.  Clark  of  a  paper 
entitled  "What  Principles  Should  Govern  the  Determination  of 
Wages  by  Arbitration  Boards?"  before  the  American  Economic 
Association  in  1907.  The  expressed  opinion  was  almost  unanimously 
in  favor  of  a  living  wage  (Publications  of  the  American  Economic 
Association,  3d  Series,  Vol.  viii,  No.  1,  pp.  29-53). 


68    DETERMINATION  OF  RAILWAY  WAGES 

payment  of  a  living  wage.  The  evil  effects 
upon  society  and  upon  the  laborer  himself 
arising  from  the  failure  to  receive  such  a 
wage  are  patent.  Undoubtedly  a  living  wage 
is  a  necessity;  the  real  issue  is  whether  it  is 
possible  to'  determine  the  essentials  consti- 
tuting a  normal  standard  of  living,  and 
whether  the  amount  of  money  required  to 
purchase  these  essentials  can  be  calculated 
within  reasonably  exact  limits. 

Recent  investigations  concerning  the  es- 
sentials properly  constituting  the  normal 
standard  of  living  show  virtual  unanimity  of 
opinion.  In  addition  to  food  in  such  quantity 
and  of  such  quality  as  the  average  American 
laborer  consumes,  living  quarters  with  sani- 
tary conveniences,  and  large  enough  to  meet 
the  requirements  of  morality,  clothing,  warm 
and  of  good  appearance,  and  the  necessary 
fuel  and  light,  the  normal  standard  includes 
a  provision  for  a  small  amount  of  recreation, 
for  medical  attendance,  and  for  a  sum  of 
money  to  be  utilized  to  tide  over  short  periods 
of  unemployment  and  to  provide  for  life 
insurance  and  membership  in  some  benefit 
society.^  The  above  essentials  are  based  on 
the  needs  of  a  family  of  five,  consisting  of  a 
man  and  wife,  and  three  dependent  children. 

1  E.  T.  Devine,  Principles  of  Relief ,  pp.  29-36;  L.  B.  More,  Wage- 
Earners'  Budgets,  pp.  269-270;  R.  C.  Chapin,  Standard  of  Living 
among  Workingmen's  Families  in  New  York  City,  pp.  75-198. 


THE  LIVING  WAGE  69 

Such  is  the  estimation  of  the  essentials  in  a 
normal  standard  of  Hving  agreed  upon  by 
economists  and  social  investigators,  and  put 
into  practice  in  the  administration  of  the 
Australasian  arbitration  and  wages  boards.^ 
The  practicability  of  determining  the 
amount  of  compensation  necessary  to  secure 
this  normal  standard  in  the  United  States  has 
been  established  by  Chapin,  More,  Nearing, 
Streightoff,  and  by  investigations  undertaken 
by  the  United  States  Bureau  of  Labor  Sta- 
tistics, and  by  various  state  labor  bureaus. 
Variations  appear,  it  is  true,  but  these  are 
due  to  differences  in  locality  or  in  the  period 
of  the  investigations,  living  costs  varying 
considerably  from  time  to  time  and  from 
place  to  place.  For  New  York  City  Chapin 
estimated  that  the  above  essentials  could  be 
obtained  for  a  yearly  expenditure  of  $900;  ^ 
More  put  the  figure  at  from  $800  to  $900.  ^ 
Dr.  Devine  concluded  that  unless  a  family 
of  five  in  New  York  City  in  about  the  year 
1905  received  at  least  $600  a  year,  it  would 
inevitably  become  dependent,^  and  for  the 
United  States  at  large  Streightoff  estimated 
that  a  family  living  wage  in  the  cities  should 

^  Economic  Journal,  Vol.  xxv.  No.  99,  p.  823;  Harvard  Law  Re- 
view, Vol.  XXIX,  No.  1,  pp.  14-15;  Aves,  Wages  Boards,  Appendix, 
pp.  216-217;  Bulletin,  U.S.  Bureau  of  Labor  Statistics,  No.  167, 
pp.  9,  146.  165,  167. 

2  Chapin,  pp.  245-250.      ^  More,  pp.  269-270.     *  Devine,  p.  35. 


70    DETERMINATION  OF  RAILWAY  WAGES 

average  $650.^  These  various  determina- 
tions, based  on  careful  investigation,  give 
evidence  that  it  is  possible  in  general  terms 
to  arrive  at  a  sufficiently  exact  calculation  of 
the  normal  standard  of  living  and  of  the  wage 
necessary  to- secure  that  standard. 

In  view  of  the  evident  possibility  of  deter- 
mining the  amount  of  a  living  wage,  it  seems 
that  arbitration  boards  in  applying  the  princi- 
ples of  a  living  wage  should  be  governed  in 
their  findings  by  reference  to  such  results  as 
those  obtained  by  More  and  Chapin.  In- 
stead, however,  recourse  has  been  had  to  such 
expedients  as  those  illustrated  in  the  sum- 
mary of  the  reasoning  of  the  board  in  the 
Southern  Railway  Arbitration  given  above.  ^ 
It  is  not  valid  to  assume  that  the  average  rate 
paid  to  unskilled  men  on  neighboring  lines 
is  necessarily  a  living  wage.  Wage  compari- 
sons as  between  different  roads  are  proper 
when  the  principle  of  standardization  is  in- 
volved. In  that  case,  the  desire  is  to  estab- 
lish a  uniform  rate  on  all  roads  within  a  given 
territory,  and  for  this  purpose,  a  comparison 
is  required  so  that  compensation  on  those 
roads  paying  low  wages  may  be  raised  to  the 
average,  going,  standard  rate  of  the  district. 
The  issue  is  primarily  uniformity.    In  the 

1  F.  H.  Streightoff,  Standard  of  Living,  p.  162. 
*  See  above,  p.  65. 


THE  LIVING  WAGE  71 

application  of  the  living  wage  principle, 
however,  the  Issue  Is  adequacy  of  wages  — ■ 
the  amount  of  the  wage  required  to  main- 
tain a  predetermined  normal  standard  of  liv- 
ing. If  it  be  decided  to  base  wages  of  tele- 
graphers or  maintenance  of  way  employees 
on  the  principle  of  a  living  wage,  then  a  de- 
termination of  their  compensation  can  never 
be  based  fairly  on  a  comparison  with  the 
wages  paid  the  same  grades  of  employment 
on  other  lines.  The  sole  measure  of  a  living 
wage  is  the  amount  of  money  required  at  a 
given  time  and  at  a  given  place  to  secure  for 
an  employee,  assuming  that  he  Is  married 
and  has  a  certain  number  of  dependent  chil- 
dren, a  normal  standard  of  living.  This 
standard  and  the  compensation  necessary 
to  obtain  It  have  been  determined  for  cer- 
tain localities,  and  it  Is  possible,  by  taking 
account  of  differences  in  the  cost  of  food,  rent, 
clothing,  etc.,  between  these  localities  and 
the  one  concerned  in  the  particular  arbitra- 
tion, or  by  referring  to  the  general  average 
of  the  living  wage  for  the  entire  country,  to 
calculate  a  reasonably  exact  approximation 
of  the  living  wage  for  the  employees  Involved. 
One  of  the  important  problems  confronting 
railway  arbitration  boards  has  been  the  ques- 
tion of  the  influence  which  the  inability  of 
the  road  to  pay  should  have  upon  demands  for 


72    DETERMINATION  OF  RAILWAY  WAGES 

wage  advance  based  on  the  principle  of  the 
Hving  wage,  when  such  inabiHty  arises  from 
some  cause  other  than  business  depression. 
In  Australasia  the  practice,  in  so  far  as  liv- 
ing wages  are  concerned,  has  been  to  dis- 
regard the  financial  condition  of  the  employer. 
The  following  quotation  from  a  speech  in  the 
Legislative  Council  of  New  Zealand  is  fairly 
typical  of  the  attitude  of  the  members  of  arbi- 
tration and  wages  boards.  After  upholding 
the  principle  of  paying  a  living  wage,  the 
speaker  said:  "And  if  a  trade  cannot  be  car- 
ried on  so  as  to  give  the  worker  such  a  wage 
as  to  enable  him  to  work  at  that  trade  and 
enable  those  who  are  dependent  on  him  to 
live  in  decency,  we  do  not  want  that  trade, 
because  there  are  in  this  country  other  trades 
still  left  in  which  a  competent  man  can  be 
paid  such  wages  as  will  keep  him  from  deg- 
radation and  maintain  him  in  that  position 
in  which  we,  as  civilized  people,  wish  to  see 
our  workers  as  a  whole."  ^  In  considering  the 
effect  of  inability  to  pay  upon  the  standardi- 
zation of  wages,  the  conclusion  reached,  based 
upon  the  practice  in  the  United  States,  and 
upon  the  evident  advantages  of  standardiza- 
tion, was  that  the  unprofitableness  of  indi- 
vidual roads  should  not  militate  against  the 
application  of  that  principle.  The  employees 

^  Aves,  Appendix,  p.  216, 


THE  LIVING  WAGE  73 

concerned  with  standardization  receive  a 
wage  far  in  excess  of  that  required  to  secure 
the  normal  standard  of  living,  and  if  arbitra- 
tion boards  in  the  United  States  have  univer- 
sally refused  to  allow  unprofitable  roads  to 
pay  less  than  the  standard  to  these  employ- 
ees, they  should  not  permit  any  business,  no 
matter  what  its  financial  condition,  to  pay 
less  than  the  full  living  wage  to  men  whose 
compensation  is  close  to  the  minimum  of 
subsistence.  A  living  wage  to  the  lowest  paid 
men  is  paramount  and  takes  precedence  over 
every  other  charge  on  the  industry.  If  need 
be,  prices  should  be  raised  in  order  to  permit 
the  business  to  pay  a  living  wage  to  its  un- 
skilled and  lowest  paid  employees. 

When  inability  to  pay  arises  out  of  gen- 
eral business  depression,  arbitration  boards 
face  an  additional  problem  —  not  only  a 
decision  as  to  whether  wages  should  be  in- 
creased on  the  principle  of  a  living  wage  dur- 
ing periods  of  depression,  but  also  whether 
reductions  in  the  wages  of  the  lowest  paid 
men  should  be  allowed  at  such  times.  In- 
creases based  on  the  living  wage  principle 
should  be  granted  always  regardless  of  the 
condition  of  any  particular  business,  or  of 
business  in  general.  The  payment  of  a  living 
wage  is  paramount,  the  first  charge  on  the 
industry.     During   periods   of   business   de- 


74    DETERMINATION  OF  RAILWAY  WAGES 

pression,  it  is  likely  that  the  prices  of  the 
commodity  sold  by  the  employer  are  low  and 
that  his  margin  of  profit  is  exceedingly  nar- 
row in  spite  of  the  reduction  of  his  business 
costs  to  the  lowest  possible  amount.  An  in- 
crease in  the  wage  bill  may  force  the  em- 
ployer out  of  business  if  he  has  exhausted 
every  expedient  for  reducing  his  cost.  For 
this  reason,  employees  should  present  wage 
demands  only  during  periods  of  normal  busi- 
ness activity  or  of  intense  prosperity.  If  they 
fail  to  have  regard  to  these  more  opportune 
times  for  demanding  wage  increases,  how- 
ever, arbitration  boards,  nevertheless,  should 
grant  the  advance  required  to  bring  existing 
compensation  to  the  living  wage  level,  for 
employees  are  entitled  at  all  times  to  a  normal 
standard  of  living. 

The  question  of  allowing  reductions  in 
wages  during  periods  of  business  depression 
came  to  the  fore  in  the  crisis  of  1907.  Labor 
leaders  at  that  time  held  that  the  working 
classes  were  in  no  way  responsible  for  the 
depressed  condition  of  business,  and  there- 
fore, employees  should  not  be  forced  to  suf- 
fer for  the  faults  of  others.^  Again,  it  was 
argued  that  wage  reductions  tend  to  accen- 
tuate depression,  for  they  compel  retrench- 
ment in  household  economy,  thus  curtailing 

*  American  Federationist,  February,  1908,  p.  107. 


THE  LIVING  WAGE  75 

consuming  power  and  lessening  demand.^ 
These  arguments  are  not  sufficiently  con- 
vincing to  form  a  basis  for  disallowing  re- 
ductions during  periods  of  business  depres- 
sion. It  is  probable  that  the  ups  and  downs 
of  prosperity,  crisis,  and  depression  will  be 
leveled  off  in  the  course  of  time,  but  at  pres- 
ent arbitration  boards  must  work  on  the 
assumption  that  recurring  depressions  in  the 
field  of  business  are  normal  phenomena.  The 
studies  of  Professor  W.  C.  Mitchell  demon- 
strate that  depression  sets  in  motion  certain 
processes  of  readjustment  by  which  a  return 
to  business  prosperity  is  made  possible.  Thus, 
low  selling  prices  of  their  products  force 
managers  to  exercise  the  closest  economy  and 
the  most  skillful  organization  of  the  plant  in 
order  to  obtain  profits,  or  even  to  maintain 
the  solvency  of  the  business.  Costs  are  re- 
duced to  the  minimum  by  this  economical 
management,  by  the  reduced  prices  of  raw 
materials,  and  by  the  lessened  labor  cost 
due  to  the  discharge  of  the  more  incompetent 
employees  and  the  retention  of  the  efficient.^ 
Any  check  to  these  processes  of  readjust- 
ment will  seriously  hinder  the  return  of  busi- 
ness prosperity. 

A  reduction  in  wages,  it  is  true,  will  still 

*  American  Federationist,  December,  1906,  p.  977;  June,  1907, 
p.  413;  February,  1908,  p.  107. 

2  W.  C.  Mitciiell,  Business  Cycles,  pp.  578-579. 


76    DETERMINATION  OF  RAILWAY  WAGES 

further  lower  labor  costs,  but  the  possibility 
of  a  reduction  in  this  item  will  tend  to  cause 
business  managers  to  neglect  economies  which 
may  be  effected  in  other  directions  without 
lowering  the  standard  of  living  of  a  class  of 
labor  already  extremely  low  in  the  scale. 
Furthermore,  the  efficiency  of  labor,  which  is 
increased  during  periods  of  depression  on 
account  of  the  retention  of  more  competent 
employees,  will  be  decreased  by  a  reduction 
in  wages.  Thus,  although  a  wage  reduction 
will  decrease  labor  costs  and  in  that  respect 
hasten  the  expansion  of  business  after  a 
period  of  depression,  the  same  reduction  will 
probably  more  than  counteract  the  process 
of  readjustment  by  checking  the  tendency 
of  business  managers  to  introduce  economies 
in  costs  other  than  labor,  and  by  decreasing 
the  efhciency  of  the  employees.  In  addition, 
it  may  be  argued  that,  since  the  wages  of  un- 
skilled labor  tend  to  fall  off  during  periods 
of  depression  more  rapidly  than  the  wages 
of  skilled  employees,  this  tendency  should  be 
checked,  because,  from  the  standpoint  of  tlie 
living  wage,  skilled  laborers  are  better  able 
to  bear  a  reduction  than  unskilled  laborers. 
For  these  reasons,  therefore,  reductions  in  the 
wages  of  low-paid  men  during  periods  of 
business  depression  should  be  disallowed. 


CHAPTER  III 

THE  INCREASED  COST  OF  LIVING 

During  the  past  ten  years,  railway  em- 
ployees in  the  United  States  and  Canada 
have  appealed  frequently  to  the  increasing 
cost  of  living,  as  a  basis  of  wage  advance.  In 
numerous  disputes  settled  under  the  provi- 
sions of  the  Erdman  and  Newlands  Acts  and 
under  the  Canadian  Industrial  Disputes  In- 
vestigation Act,  the  employees  have  argued 
that  the  general  advance  in  the  prices  of  com- 
modities and  the  consequent  loss  in  pur- 
chasing power  operated  as  a  reduction  in 
wages,  and  therefore  an  increase  in  wages 
equivalent  to  the  advance  in  prices  was  im- 
perative. The  reasons  for  the  use  of  increased 
living  costs  as  a  principle  of  wage  advance 
are  not  far  to  seek.  For  nearly  a  quarter  of  a 
century  the  "high  cost  of  living"  has  been  a 
catch  phrase  upon  the  lips  of  every  house- 
keeper; newspapers  and  magazines  have  del- 
uged the  public  with  the  whys  and  where- 
fores of  it;  various  government  commissions 
have  investigated  and  reported;  indeed,  few 
public  questions  at  the  present  day  equal  in 
general  interest  the  high  cost  of  living.  The 
pronounced  advance  in  the  prices  of  those 


78    DETERMINATION  OF  RAILWAY  WAGES 

commodities  which  constitute  the  chief  ob- 
jects of  consumption  in  workingmen's  fami- 
lies is  one  of  the  most  striking  features  of  the 
general  economic  situation  to-day.  We  know, 
too,  that  this  upward  tendency  of  prices  is 
not  confined  to  any  one  country,  but  that  the 
rise  in  prices  of  food,  rent,  clothing,  fuel,  and 
light  is  practically  world-wide.^  In  North 
America,  however,  and  particularly  in  the 
United  States,  the  advance  in  recent  years 
has  been  unprecedented.  Statistics  of  food 
prices  collected  by  the  United  States  Bureau 
of  Labor  Statistics  show  that  from  1907  to 
1914,  retail  prices  of  food  consumed  by  the 
average  workingman's  family  advanced  about 
24.5  per  cent.^  The  increases  in  fuel  prices 
from  1907  to  1914  ranged  from  6.9  to  9.7 
per  cent.^  Other  authorities  agree  in  plac- 
ing the  rise  of  rents  at  10  to  20  per  cent.* 
This  rise  in  the  cost  of  living  affects  the  well- 
being  of  every  class,  especially  those  depend- 
ent upon  a  fixed  income.  The  publicity  given 
to  the  increasing  cost  of  living,  and  its  almost 
universal  effect,  therefore,  have  led  railway 
employees  to  put  forward  this  basis,  confident 

1  Select  Committee  of  the  Senate  on  Wages  and  Prices  of  Com- 
modities, 61st  Cong.,  3d  Sess.,  Vol.  i,  pp.  8-10. 

2  Bulletin,  U.S.  Bureau  of  Labor  Statistics,  No.  156,  p.  9. 

3  Ibid.,  p.  24. 

*  Devine,  Principles  of  Relief,  p.  36;  More,  Wage  Earners'  Budg- 
ets, p.  32;  Department  of  Labour  (Canada),  "Wholesale  Prices 
in  Canada,  1913,"  p.  257. 


THE  INCREASED  COST  OF  LIVING      79 

that  their  demands  would  receive  attentive 
consideration  from  arbitrators  and  conciha- 
tors  who,  in  all  likelihood,  were  affected  by 
this  same  increase  in  the  cost  of  living. 

Again,  the  general  impression  to-day  is  that 
wages  of  the  employed  class  as  a  whole  have 
not  kept  pace  with  the  rapid  advance  in  the 
prices  of  commodities.  The  Senate  Commit- 
tee of  1910  reported  that  wages  had  not  ad- 
vanced as  rapidly  as  prices,^  and  the  Mas- 
sachusetts Commission  of  the  same  year  came 
to  a  similar  conclusion.^  Dr.  I.  M.  Rubinow 
in  a  recent  article  said,  "The  American  wage- 
worker,  confronted  with  a  rapidly  rising  price 
movement  has  been  losing  ground  surely  and 
not  even  slowly,  so  that  the  sum  total  of 
economic  progress  of  this  country  for  the  last 
quarter  of  a  century  appears  to  be  a  loss  of 
from  10  to  15  per  cent  in  his  earning  power. "^ 
The  statistics  of  the  United  States  Bureau  of 
Labor  show  a  tendency  in  wages  to  lag  be- 
hind prices,  but  not  to  the  extent  claimed  by 
Rubinow.^  Reports  by  special  committees, 
the  verdict  of  economists,  and  the  results  of 
statistical  investigation  are  almost  one  in  the 
conclusion  that  the  purchasing  power  of  the 

^  Select  Committee  of  the  Senate,  61st  Cong.,  3d  Sess.,  Vol.  i, 
p.  52. 

^  Report  of  Massachusetts  Commission  on  the  Cost  of  Living 
(1910),  pp.  88-89. 

*  American  Economic  Review,  December,  1914,  p.  813. 

*  Bulletin,  U.S.  Bureau  of  Labor,  No.  77,  pp.  1-11. 


80    DETERMINATION  OF  RAILWAY  WAGES 

workman's  wage  has  tended  downward  dur- 
ing the  past  decade.  The  leaders  of  railway 
labor  have  been  alive  to  the  impression  pro- 
duced by  the  conclusions  stated  above,  and 
they  have  claimed  that  railway  employees 
are  in  the  same  position  in  respect  to  wages  as 
employees  in  other  industries.  Thus,  the  dis- 
proportionate rise  in  wages  of  workmen  in 
general  in  comparison  with  the  advance  in 
prices  has  constituted  another  factor  favor- 
ing the  use  of  the  increased  cost  of  living  as  a 
basis  of  wage  demands  by  the  railway  em- 
ployees. 

For  these  reasons,  then,  the  increased  cost 
of  living  principle  has  found  its  place  in  the 
employees'  briefs  in  almost  every  railway 
arbitration  in  Canada  and  in  the  United 
States.  But  apart  from  these,  this  basis  of  the 
employees'  demands  goes  far  deeper  and 
finds  its  origin  in  one  of  the  oldest  and  most 
stubbornly  maintained  doctrines  of  unionism. 
This  Sidney  and  Beatrice  Webb  have  called 
the  "Doctrine  of  Vested  Interests."  The 
objects  of  the  paragraphs  immediately  fol- 
lowing will  be  to  examine  the  relation  of  this 
doctrine  to  the  cost  of  living,  and  to  give 
some  idea  of  the  attitude  of  American  rail- 
way labor  toward  it. 

By  the  doctrine  of  vested  interests  is  meant 
the  belief  that  the  wages  "...  hitherto  en- 


THE  INCREASED  COST  OF  LIVING      81 

joyed  by  any  section  of  workmen  ought  under 
no  circumstances  to  be  interfered  with  for  the 
worse."  ^  In  other  words,  the  standard  of 
living  must  be  maintained  at  any  cost.  The 
standard  of  Hving,  however,  is  an  indefinite 
and  much  misunderstood  phrase.  It  is  a 
complex  of  so  many  factors  that  in  order  to 
determine  its  exact  relation  to  the  cost  of 
living,  it  will  be  necessary  to  analyze  the 
term  into  its  component  parts.  The  standard 
of  living  of  any  given  class  of  people  may  be 
defined  as  the  scale  of  comfort  which  any 
individual  or  family  instinctively  sets  as  in- 
dispensable to  its  moral,  mental,  and  phys- 
ical development.  It  is  a  resultant  of  two 
general  forces,  environment  and  individ- 
uality.^ Thus,  such  factors  as  the  state  of 
civilization,  the  class  of  society  to  which  the 
individual  or  family  belongs,  the  place  of 
residence,  the  size  of  the  family,  the  number 
of  wage-earners  in  the  family,  and  the  char- 
acter of  their  occupations,  and  the  amount  of 
income  —  all  these,  together  with  the  ideals, 
ambitions,  and  the  capacity  for  wisely  spend- 
ing the  income  act  upon  each  other  to  de- 
termine the  standard.  Reduced  to  its  sim- 
plest terms,  however,  the  standard  of  living 
may  be  said  to  depend  upon  four  factors :  the 

»  Webb,  Industrial  Democracy  (1902  ed.).  p.  562. 
2  Streightoff,  pp.  3-4. 


82    DETERMINATION  OF  RAILWAY  WAGES 

state  of  civilization,  the  class  of  society,  the 
income,  and  the  personal  factor.  As  civiliza- 
tion advances  and  becomes  more  complex, 
*' there  is  a  constant,  though  irregular  rise  of 
the  standard  of  living."  ^  Numerous  com- 
modities which  many  years  ago  were  re- 
garded as  luxuries  are  now  brought  within 
the  reach  of  every  one.  Few  homes  now  lack 
modern  sanitary  conveniences;  clothes  of 
better  quality  and  more  fashionable  style 
can  be  purchased  at  reasonable  prices;  the 
opportunities  for  amusement,  such  as  mov- 
ing picture  shows,  have  increased;  and,  taken 
all  in  all,  the  general  advance  in  civilization 
has  served  as  a  potent  factor  in  bettering  the 
condition  of  the  great  body  of  people. 

The  class  of  society  to  which  an  individual 
belongs  affects  his  standard  of  living.  The 
college  professor  whose  salary,  perhaps,  is 
less  than  that  of  a  locomotive  engineer, 
maintains  a  much  higher  standard  of  living 
owing  to  the  requirements  of  his  calling  and 
to  his  associations.  The  size  of  the  income 
limits  the  ability  of  the  individual  both  to 
realize  his  ambitions  and  ideals,  and  to  pur- 
chase those  commodities  and  services  which 
he  regards  as  necessary  to  his  welfare.  The 
personal  factor  as  a  determinant  of  the  stand- 
ard of  living  has  received  much  attention 

*  Streightoff,  p.  4. 


THE  INCREASED  COST  OF  LIVING      83 

from  recent  writers  and  investigators.  It 
has  been  claimed  that  the  standard  of  hving 
depends  more  upon  the  degree  of  judgment 
exercised  in  the  expenditure  of  the  income 
than  upon  any  other  single  factor.  The  re- 
sults of  recent  investigations,  however,  prove 
the  contrary.  The  Chapin  report  on  the  stand- 
ard of  living  in  New  York  City  states  that 
the  personal  factor  does  operate  in  every 
family,  as  regards  the  habits  of  the  father 
and  the  managing  ability  of  the  mother,  but 
there  are  limits  to  what  can  be  done  by  thrift 
and  economy;  for  example,  decent  housing 
cannot  be  obtained  below  a  certain  figure, 
health  cannot  be  maintained  on  bread  and 
tea,  and  in  spite  of  skillful  mending,  shoes  and 
coats  will  wear  out.^  Investigation  seems  to 
show  that  the  income  is  the  chief  determi- 
nant of  the  standard  of  living.  Thus  Chapin 
says,  "The  actual  standard  ...  is  set  prima- 
rily ...  by  the  wages  paid  and  the  prices 
charged."  ^  Similarly,  More  states,  "From 
an  economic  standpoint  .  .  .  the  amount  of 
income  is  the  most  important  factor  in  de- 
termining the  standard  of  comfort  attainable 
in  an  average  workingman's  family."  ^ 

If  it  be  granted  that  the  income  is  the  chief 
determinant  of  the  standard  of  living,  then 

1  Chapin,  pp.  249-250.  ^  Ibid.,  p.  250. 

^  More,  p.  270;  Nearing,  The  Adequacy  of  American  Wages,  p.  2. 


84    DETERMINATION  OF  RAILWAY  WAGES 

any  reduction  in  money  wages  unattended 
by  a  corresponding  reduction  in  prices,  or 
any  reduction  in  real  wages  as  a  consequence 
of  an  upward  price  tendency  will,  of  course, 
operate  against  the  doctrine  of  vested  in- 
terests. It  was  argued  in  the  Chicago,  Bur- 
lington and  Quincy  Arbitration  (1914)  that 
as  a  result  of  the  increased  cost  of  living,  the 
purchasing  power  of  the  wages  of  the  em- 
ployees had  declined  "resulting  in  a  lower 
standard  of  living,  a  sacrifice  of  comfort,  a 
denial  of  better  education  for  the  children  of 
workingmen,  and  withal  a  discontent  which 
tends  to  reduce  efficiency,  to  the  detriment 
of  both  the  employer  and  the  employee."  ^ 
The  railway  arbitrations,  both  in  Canada 
and  in  the  United  States,  in  which  this  same 
statement  has  been  made  in  various  forms, 
are  too  numerous  to  set  forth  here.^   In  the 

*  Chicago,  Burlington  and  Quincy  Arbitration  (1914),  Proceed- 
ings, pp.  58-59. 

*  Among  the  arbitrations  in  the  United  States  in  which  the  em- 
ployees have  brought  forward  the  increased  cost  of  Hving  argument 
are:  Chicago  Switchmen's  Arbitration  (1910);  Denver  and  Rio 
Grande  Arbitration  (1910);  Western  Firemen  and  Enginemen  (1910); 
Missouri  Pacific  Arbitration  (1910);  "Big  Four"  Arbitration  (1910); 
Eastern  Conductors  and  Trainmen's  Arbitration  (1913);  Southern 
Railway  Arbitration  (1913);  Chicago  and  Western  Indiana,  Belt 
Railway  Co.  Arbitration  (1913);  Wheeling  and  Lake  Erie,  etc.. 
Arbitration  (1914);  "Nickel  Plate"  Arbitration  (1914);  Western 
Engineers  and  Firemen's  Arbitration  (1915).  In  Canada  the  fol- 
lowing may  be  cited:  Canadian  Northern  vs.  Engineers  (1908); 
Canadian  Northern  vs.  Maintenance  of  Way  Employees  (1909); 
Grand  Trunk  vs.  Machinists  (1911);  Canadian  Pacific  vs.  Main- 
tenance of  Way  Employees  (1911);  Canadian  Northern  vs.  Main- 


THE  INCREASED  COST  OF  LIVING      85 

Eastern  Firemen's  Arbitration  (1913),  Presi- 
dent W.  S.  Carter  of  the  Brotherhood  of 
Enginemen  and  Firemen  said,  "I  say  this 
general  upward  trend  of  the  cost  of  hving,  or 
rather  the  downward  trend  of  the  purchasing 
power  of  money,  is  one  of  the  most  impor- 
tant things  to  be  considered  in  wage  matters."^ 
Railway  employees  are  being  constantly 
reminded  that  the  only  means  of  maintain- 
ing their  standard  of  living  in  view  of  steadily 
advancing  prices  is  to  demand  a  correspond- 
ing increase  in  wages.  The  publications  of 
the  railway  brotherhoods  make  frequent  ref- 
erence to  the  necessity  of  the  maintenance  of 
the  standard  of  living,  and  one  asserts  that 
*'  there  is  a  great  work  to  be  done  by  the  rail- 
road labor  organizations  before  the  pay  of 
railroad  employees  bears  the  same  proportion 
to  the  cost  of  living  now  that  their  wages  did 
ten  years  ago."  ^  Another,  quoting  the  men's 
counsel  in  the  Georgia  Railway  Strike  in 
1910,  states  that  it  is  useless  to  blame  the 
trusts  and  the  tariff  and  to  attempt  to  reduce 
prices.  The  public  is  in  sympathy  with  the 
brotherhoods,  and  the  course  for  the  men  to 

tenance  of  Way  Employees  (1911);  Grand  Trunk  Pacific  vs.  Main- 
tenance of  Way  Employees  (1911);  Canadian  Pacific  vs.  Telegra- 
phers (1912);  Michigan  Central  vs.  Telegraphers  and  Station  Agents 
(1912). 

1  Eastern  Firemen's  Arbitration  (1913),  Proceedings,  p.  2432. 

-  Locomotive  Firemen  and  Enginemen  s  Magazine,  September, 
1910,  p.  401. 


86    DETERMINATION  OF  RAILWAY  WAGES 

pursue  is  to  make  demands  for  substantial 
and  drastic  wage  advance.^  The  policy  of  the 
railway  brotherhoods,  then,  in  the  convic- 
tion that  wages  have  not  moved  on  a  line 
parallel  with  the  increasing  cost  of  living,  is 
to  force  wage  concessions  from  the  railways, 
until  the  percentage  increase  in  wages  through 
a  term  of  years  is  equal  to  the  percentage 
increase  in  the  cost  of  commodities.  In  this 
way  only,  they  claim,  can  the  standard  of 
living  be  maintained. 

The  position  of  the  railways  in  regard  to 
the  merits  of  the  increased  cost  of  living  as  a 
basis  for  wage  advances  is  somewhat  diffi- 
cult to  define.  With  them  it  is  more  a  ques- 
tion of  fact  than  of  principle.  In  general  it 
may  be  said  that  the  employers  hold  that  the 
various  wage  increases  between  two  definite 
years  have  taken  into  account  the  advances 
in  the  cost  of  living  for  that  period.  In  the 
Eastern  Conductors  and  Trainmen's  Arbi- 
tration (1913)  the  roads  maintained  that  the 
Clark-Morrissey  Award  of  1910  should  be 
the  starting-point  in  determining  the  ad- 
vance in  wages,  and  that  since  1910  there 
had  been  no  change  in  living  costs  to  warrant 
an  increase  in  wages. ^    This  same  position 

1  Locomotive  Firemen  and  Enginem,en's  Magazine,  March,  1910, 
pp.  397-398. 

^  Eastern  Conductors  and  Trainmen's  Arbitration  (1913),  Rail- 
ways' Reply  Brief,  p.  7;  Report  of  Board,  p.  68. 


THE  INCREASED  COST  OF  LIVING      87 

was  taken  by  the  railways  in  the  Eastern 
Engineers'  (1912)  and  the  Western  Engi- 
neers' and  Firemen's  Arbitrations  (1915).^ 
Thus,  the  railways  question  the  facts  in  the 
men's  claims,  without  admitting  or  denying 
the  justice  or  injustice  of  a  wage  demand 
based  upon  the  maintenance  of  the  standard 
of  living.  Elisha  Lee,  Chairman  of  the  Con- 
ference Committee  of  Managers  in  the  East- 
ern Conductors  and  Trainmen's  Arbitra- 
tion (1913),  stated  perhaps  more  clearly  than 
any  one  else  the  attitude  of  the  railways  to- 
ward the  principle  of  the  maintenance  of  the 
standard  of  living.  He  said:  "It  is  an  attrac- 
tive thought  that  a  wage  should  be  based 
upon  an  estimated  standard  of  what  is  re- 
quired for  a  healthy  life.  But  such  an  ideal 
is  hopelessly  impracticable  of  application.  .  .  . 
Must  we  not  in  the  final  analysis  face  the 
fact  that  wages  are  a  payment  for  a  service 
rendered,  and  that  it  is  neither  just  nor 
practicable  to  force  employers  to  pay,  not 
according  to  the  value  of  the  service,  but 
according  to  the  workman's  standard  of  his 
own  needs?"  ^  Railway  officials,  however, 
are  not  agreed  as  to  the  rejection  of  the 
employees'  arguments,  for  President  W.  C. 

^  See  also  "Nickel  Plate"  Arbitration  (1914),  Proceedings,  p.  135; 
Southern  Railway  Arbitration  (1918),  Report  of  Board,  p.  1. 

^  Eastern  Conductors  and  Trainmen's  Arbitration  (1913),  Pro- 
ceedings, p.  2054. 


88    DETERMINATION  OF  RAILWAY  WAGES 

Brown,  of  the  New  York  Central,  stated  in 
1910,  during  the  proceedings  of  the  Clark- 
Morrissey  Arbitration,  that  "it  may  be  laid 
down  as  a  sound  business  principle  that 
further  advances  should  only  be  made  when, 
and  in  such  amount  as  shall  be  necessary 
to  meet  the  increased  cost  of  living."  ^  The 
railways'  position,  then,  in  regard  to  the 
principle  involved  in  the  increased  cost  of 
living  as  a  wage  basis  is  uncertain,  but  as 
to  the  question  of  fact,  their  contention  is 
definite  that  the  compensation  of  employee 
has  increased  in  equal  or  greater  proportion 
than  have  the  prices  of  commodities,  and, 
therefore,  no  wage  advances  are  justifiable 
on  that  basis. 

Apart,  however,  from  their  view  as  to  the 
merits  of  the  principle  itself,  the  railways 
maintain  that  the  application  of  the  prin- 
ciple of  the  increased  cost  of  living  is  at- 
tended by  serious  drawbacks  which  militate 
against  its  value  as  a  basis  for  wage  advances. 
In  the  first  place,  objection  is  made  on  the 
ground  that  in  estimating  the  cost  of  living, 
food  prices  only  are  considered  and  that  food 
represents  from  thirty-five  to  fifty  per  cent 
of  the  total  expenditures  of  families  earning 
from  $200  to  $1200  a  year.   For  instance, 

^  Eastern  Conductors  and  Trainmen's  Arbitration  (1913),  Quoted 
in  Employees'  Brief,  p.  23. 


THE  INCREASED  COST  OF  LIVING     89 

in  the  Eastern  Conductors  and  Trainmen's 
Arbitration  (1913)  the  railway  representa- 
tives claimed  that,  as  food  expenditure  in  a 
conductor's  family  represented  only  about 
forty  per  cent  of  the  total  expenditure,  the 
13.4  per  cent  increase  in  the  cost  of  products 
claimed  by  the  men  amounted  to  about  a 
5.3  per  cent  increase  in  the  total  cost  of  liv- 
ing.^ For  this  reason,  and  also  because  the 
personal  element  plays  such  an  important 
part  in  determining  the  expenditures  of  a 
family,  the  railways  maintain  that  the  cost 
of  living  is  incapable  of  accurate  statistical 
expression,  and  that  it  is,  therefore,  impos- 
sible to  determine  the  true  rate  of  increase. 
As  a  further  argument  against  the  increase  of 
wages  on  the  basis  of  the  advanced  cost  of 
living,  the  roads  claim  that  although  their 
*'cost  of  living,"  too,  is  much  higher  on  ac- 
count of  increases  in  wages,  taxes,  expendi- 
tures for  improvements  and  materials,  yet 
they  are  allowed  no  means  of  increasing  their 
income.  They  are  asked  to  meet  every  ad- 
vance in  the  cost  of  living  of  their  employees, 
to  which  advance  they  add  nothing,  and  yet 
they  are  denied  the  privilege  enjoyed  by  every 
other  employer  of  labor  of  adding  increased 
costs  to  the  price  of  their  only  commodity  or 

1  Eastern  Conductors  and  Trainmen's  Arbitration  (1913),  Rail« 
ways'  Reply  Brief,  p.  7;  Report  of  Board,  p.  68. 


90    DETERMINATION  OF  RAILWAY  WAGES 

service  —  transportation.^  The  railways  as- 
sert that  their  advancing  expenditures  have 
forced  them,  in  spite  of  the  economies  inci- 
dent to  more  efficient  management,  to  re- 
quest advances  in  rates  in  order  to  make 
both  ends  meet.  Thus  the  roads  maintain 
that  they  are  practically  in  the  same  position 
as  the  employees  in  regard  to  the  increased 
cost  of  living,  and  that  any  increase  in  their 
cost  of  living  by  an  advance  in  wages  will, 
sooner  or  later,  be  reflected  in  the  higher  rates 
which  the  public  will  have  to  pay.^ 

The  attitude  of  the  employees  and  of  the 
railways  toward  the  Increased  cost  of  living  as  a 
principle  governing  wage  advances  has  been 
discussed ;  it  now  remains  to  consider  the  posi- 
tion taken  by  the  railway  arbitration  boards 
in  Canada  and  in  the  United  States.  It  is 
sometimes  impossible  to  ascertain  upon  what 
basis  a  certain  increase  has  been  granted, 
for  arbitration  boards  frequently  report  only 
the  increases  in  absolute  amounts  or  in  per- 
centages and  make  no  comment  as  to  the 
principles  underlying  their  awards.  There  is 
a  possibility  that  the  arbitrators  have  been 
unable  to  find  any  principle  which  should 
govern  wages  and  have  therefore  resorted  to 
a  compromise,  or  that  such  reasons  as  may 

1  The  Railway  Library,  1C09,  pp.  334-335;  Western  Firemen  and 
Enginemen's  Arbitration  (1910),  Proceedings,  p.  2;)18. 

^  Eastern  Firemen's  Arbitration  (1913),  Proceedings,  p.  2481. 


THE  INCREASED  COST  OF  LIVING      91 

have  influenced  them  are  incapable  of  with- 
standing the  vehement  criticisms  of  the  side 
which  considers  itself  the  loser,  and  therefore 
out  of  caution  are  not  set  down  in  the  award. 
Whatever  the  cause  of  this  dearth  of  com- 
ment, it  seems  desirable  that  the  boards 
should,  in  the  interest  of  future  arbitrations, 
describe  the  reasoning  by  which  the  con- 
clusion has  been  reached,  and  thus  build  up 
a  line  of  decisions,  which,  if  not  to  be  re- 
garded as  absolute  and  binding  precedents, 
may  at  least  serve  as  valuable  guides  in  wage 
controversies  of  the  future.  Fortunately, 
some  of  the  boards  have  set  forth  minutely 
the  principles  governing  their  wage  awards, 
and  this  has  been  the  case  particularly  in 
the  large  concerted  movements  of  recent 
years. 

In  the  East,  the  principle  of  standardization 
has  been  regarded  by  the  men  as  of  greatest 
importance  ^  and  increased  cost  of  living  as 
a  basis  has  in  consequence  been  less  empha- 
sized, the  Eastern  Engineers  in  1912  omit- 
ting it  altogether  from  their  brief  .^  With  this 
exception,  however,  it  may  be  said  that  the 
increased  cost  of  living  has  held  the  chief 
place  in  the  employees'  arguments;  and  it 
may  therefore  be  assumed,  in  the  absence 

^  F.  H.  Dixon,  "Public  Regulation  of  Railway  Wages,"  Pro- 
ceedings American  Economic  Association,  1914,  Vol.  xxvii,  p.  251, 
*  Eastern  Engineers'  Arbitration  (1912),  Proceedings,  p.  11. 


92    DETERMINATION  OF  RAILWAY  WAGES 

of  any  statements  of  arbitration  boards  sup- 
porting another  principle,  that  the  recent 
wage  advances  to  railway  employees  have 
been  largely  based  upon  the  increased  cost  of 
living.  It  is  impracticable  to  enumerate  here 
all  the  cases  in  which  this  principle  has  been 
employed,  expressly  or  implicitly,  as  the 
basis  of  wage  advances;  only  a  few  will  be 
mentioned.^ 

In  1910  railway  employees  in  all  sections 
of  the  United  States  received  wage  advances 
by  arbitration  based  upon  the  increased  cost 
of  living.  In  March  the  switchmen  employed 
on  thirteen  roads  having  terminals  in  Chi- 
cago received  a  ten  per  cent  advance,^  and 
this  award  was  followed  by  a  wage  increase 
granted  to  the  telegraphers  on  the  "Big 
Four."  ^  The  engineers  and  firemen,  in  a  con- 
certed movement  involving  fifty-two  West- 
ern railways,  next  obtained  increases  in  wages 

*  Among  the  railway  arbitration  awards  which  have  been  gov- 
erned partly  by  the  increased  cost  of  living,  and  which  are  not 
mentioned  above  are:  in  the  United  States:  Southern  Railway  vs. 
Maintenance  of  Way  Employees  (1913);  Chicago  and  Western 
Indiana  and  Belt  Railway  Company  of  Chicago  (1913);  Wheel- 
ing and  Lake  Erie,  Wabash,  Pittsburgh  Terminal,  West  Side  Belt 
Railway  (1914);  Chicago,  Burlington  and  Quincy  (1914);  "Nickel 
Plate"  Arbitration  (1914);  in  Canada:  Grand  Trunk  Railway  vs. 
Machinists  (1911);  Canadian  Pacific  vs.  Telegraphers  (1912);  Mich- 
igan Central  vs.  Telegraphers  (1912) ;  Canadian  Northern  vs.  Con- 
ductors (1913). 

2  Switchmen's  Arbitration  (1910);  Records,  U.S.  Board  of  Media- 
tion and  Conciliation,  File  No.  25. 

3  "Big  Four"  Arbitration  (1910),  ibid..  File  No.  26. 


THE  INCREASED  COST  OF  LIVING      93 

of  from  ten  to  twelve  per  cent,^  and  later  in 
the  year  the  same  classes  of  employees  on 
the  Denver  and  Rio  Grande  Railroad  re- 
ceived advances  by  an  award  under  the  Erd- 
man  Act.^  In  June  and  July,  1910,  the  te- 
legraphers on  the  Southern  Railway  ^  and  on 
the  Missouri  Pacific  ^  were  granted  increased 
wages,  although  the  amount  obtained  by 
these  awards  did  not  fully  meet  the  increased 
cost  of  living.  In  the  East,  the  wages  of  con- 
ductors and  trainmen  were  advanced  by  the 
Clark-Morrissey  Arbitration  involving  the 
New  York  Central  employees,^  this  board 
reporting  that  a  new  basis  of  living  and  liv- 
ing costs  had  been  reached  which  called  for 
substantial  increases  to  these  employees.  As 
a  result  of  this  award,  of  the  Baltimore  and 
Ohio  Mediation,  and  of  a  concerted  move- 
ment of  the  conductors  and  trainmen  on  the 
other  railways,  increased  rates  for  this  class 
of  employees  were  put  in  force  on  all  roads 
in  the  Eastern  District.^  In  1913,  the  con- 
ductors and  trainmen  in  the  East  received 

*  Western  Firemen  and  Enginemen's  Arbitration  (1910),  ibid.. 
File  No.  29. 

2  Denver  and  Rio  Grande  Arbitration  (1910),  ihid..  File  No. 
39. 

3  Southern  Railway  Arbitration  (1910),  ibid..  File  No.  30. 

*  Missouri  Pacific  Arbitration  (1910),  ibid..  File  No.  33. 
^  Railway  Age  Gazette,  Vol.  xlviii,  No.  19,  p.  1220. 

'  Cunningham  "Standardization  of  Wages  of  Railroad  Train- 
men," Quarterly  Journal  of  Economics,  November,  1910,  pp.  139- 
160. 


94    DETERMINATION  OF  RAILWAY  WAGES 

a  seven  per  cent  advance,  the  board  stating 
that  it  did  not  base  its  action  entirely  on  the 
increased  cost  of  Hving,  although  it  regarded 
that  principle  as  basic.  ^ 

In  Canada,  almost  without  exception,  the 
Boards  of  Conciliation  and  Investigation 
appointed  under  the  Industrial  Disputes 
Investigation  Act  have  recognized  the  prin- 
ciple of  the  increased  cost  of  living  as  a  basis 
for  wage  advances.  In  1908,  the  board  in  the 
dispute  between  the  Canadian  Northern 
Railway  and  its  engineers  found  that  the  em- 
ployees were  not  paid  enough  to  meet  the 
necessities  of  life  in  view  of  the  increased  cost 
of  living,  and  therefore  recommended  an  ad- 
vance in  wages. ^  In  the  following  year  the 
same  railroad  threatened  a  reduction  in  the 
wages  of  its  maintenance  of  way  employees, 
but  the  board  recommended,  on  account  of 
the  increased  cost  of  living,  that  no  reduction 
be  allowed.^  In  1914,  the  same  employees 
demanded  increased  wages  on  the  Canadian 
Northern,  but  the  board,  although  recogniz- 
ing the  principle  involved,  refused  to  recom- 
mend the  rates  requested,  as  increases  in 
living  costs  did  not  warrant  such  large  ad- 

*  Eastern  Conductors  and  Trainmen's  Arbitration  (1913),  Re- 
port of  Board,  p.  34. 

2  Report,  Department  of  Labour  (Canada),  1909,  Appendix, 
p.  298. 

«  Ibid.,  1910,  Appendix,  pp.  141-152. 


THE  INCREASED  COST  OF  LIVING      95 

vances.^  In  1911,  the  maintenance  of  way 
employees  on  the  Canadian  Pacific  Railway 
received  an  advance  in  wages  based  on  the 
increased  cost  of  living,^  and  the  same  em- 
ployees on  the  Canadian  Northern  ^  and  the 
Grand  Trunk  Pacific  ^  obtained  a  similar 
advance  in  the  same  year,  the  boards  being 
nearly  the  same  as  in  the  Canadian  Pacific 
case.  As  a  general  proposition,  it  may  be 
said  that  both  in  Canada  and  in  the  United 
States,  arbitration  boards  have  recognized 
the  increased  cost  of  living  as  a  basis  of  wage 
advance.  Thus,  the  Doctrine  of  Vested  In- 
terests is  upheld,  not  only  by  the  railway 
brotherhoods,  but  by  the  opinion  of  those 
actually  confronted  with  the  problem  of  find- 
ing a  basis  for  the  determination  of  wage  ad- 
vances. 

The  importance  of  maintaining  the  stand- 
ard of  living,  both  from  the  viewpoint  of  the 
employees  particularly  involved  and  of  so- 
ciety at  large,  has  been  recognized  and  urged 
by  economists.  The  opinion  generally  held 
is  that  the  lower  the  standard  of  living  of  the 
people  of  any  nation,  the  less  their  physical, 
economic,  social,  and  moral  well-being.^   It 

1  Report,  Registrar  of  Boards  of  Conciliation  and  Investigation, 
1915,  pp. 102-105 

2  Ibid.,  1911,  pp.  221-247. 

»  Ibid.,  pp.  255-274.  *  Ibid.,  pp.  248-254. 

^  Report  of  ISIassachusetts  Commission  on  the  Cost  of  Living, 
1910,  pp.  523-525. 


96    DETERMINATION  OF  RAILWAY  WAGES 

has  been  maintained  with  some  justification 
tliat  the  superiority  of  the  American  laborer 
is  due  in  the  main  to  the  fact  that  he  is  bet- 
ter fed,  clothed,  and  housed  than  workmen 
in  other  countries.  To  lower  this  standard  of 
living  will  unquestionably  affect  the  laborer's 
productivity  for  the  worse.  A  reduction  in 
the  standard,  also,  will  endanger  the  stabil- 
ity of  relations  existing  between  employers 
and  employees;  one  has  only  to  turn  to  the 
numerous  attempts  of  employers  during  the 
business  depression  of  1907  to  reduce  wages 
and  the  consequent  attitude  of  labor  to  find 
sufiicient  proof  of  the  correctness  of  this 
assertion.  The  lessening  of  national  produc- 
tiveness, the  danger  of  industrial  disturb- 
ances, and  the  physical  and  moral  deteriora- 
tion sure  to  follow  from  a  reduction  in  the 
standard  of  living  will  affect  every  class  of 
society,  and  therefore,  the  importance  of  at 
least  maintaining  the  standard  at  its  present 
level  can  hardly  be  overestimated.  The  rail- 
way brotherhoods,  as  well  as  other  labor  or- 
ganizations, aim  not  only  to  maintain,  but  to 
improve  the  standard  of  living,  and  this  policy 
should  be  regarded  as  one  of  the  strongest 
forces  making  for  the  future  development  of 
the  country  —  a  policy,  in  the  interest  of 
the  public  w^elfare,  to  be  encouraged  and 
fostered  by  every  possible  means. 


THE  INCREASED  COST  OF  LIVING      97 

If  it  be  admitted  that  the  maintenance  of 
the  standard  of  Hving  is  socially  expedient,  it 
follows  that  any  principle  of  wage  advance 
which  serves  to  keep  wages  on  a  par  with  in- 
creasing prices  will  meet  the  minimum  de- 
mands of  the  employees  and  the  best  inter- 
ests of  society.  Since  the  standard  of  living 
depends  primarily  upon  the  income  received 
and  the  prices  of  those  commodities  which 
constitute  the  objects  of  expenditure  in 
workingmen's  families,  the  increase  in  the 
cost  of  those  commodities  is  the  most  ac- 
curate index  of  the  exact  amount  by  which 
wages  must  be  increased  in  order  to  maintain 
the  standard  at  a  level.  Wages  and  prices, 
therefore,  must  move  simultaneously  and  on 
parallel  lines,  and  arbitration  boards,  in  de- 
termining the  amount  of  wage  advance, 
should  seek  to  effect  this  result. 

For  the  successful  application  of  the  in- 
creased cost  of  living  principle  to  wages,  how- 
ever, trustworthy  statistics  of  the  advance 
in  wages  and  in  the  retail  prices  of  commodi- 
ties over  a  series  of  years,  and  data  con- 
cerning consumption  in  workingmen's  fami- 
lies must  be  obtained.  Unfortunately,  these 
statistics  are  not  always  available,  and  those 
that  are  in  existence  are  frequently  so  frag- 
mentary and  unreliable  that  little  depend- 
ence can  be  placed  upon  them.   Statistics  of 


98    DETERMINATION  OF  RAILWAY  WAGES 

consumption  are  probably  the  most  complete 
and  trustworthy  of  any  of  the  three  above 
mentioned.  These  give  the  cost  and  percent- 
age of  total  expenditure  for  a  given  income 
of  the  various  commodities  which  workmen 
ordinarily  purchase,  the  headings  being  usu- 
ally food,  rent,  clothing,  fuel  and  light,  and 
sundries.  In  applying  the  principle  of  the 
increased  cost  of  living  the  percentage  ad- 
vance in  the  retail  price  of  the  commodity  is 
weighted  by  the  percentage  which  the  ex- 
penditure for  that  commodity  bears  to  the 
total  expenditure  at  a  given  income.  Thus 
the  proper  importance  is  placed  upon  those 
commodities  like  food,  which  comprise  the 
larger  part  of  family  expenditures.  Doubt 
has  often  been  expressed  as  to  whether  it  is 
possible  to  ascertain  the  cost  of  various  items 
in  a  budget  representing  a  certain  income. 
There  is  practically  universal  agreement 
nowadays  that  a  reasonably  accurate  budget 
for  any  income  can  be  constructed,  if  it  is 
based  upon  a  given  social  class  and  is  relative 
to  a  given  time  and  place.  Statistics  fulfill- 
ing these  requirements  have  been  gathered 
and  published,  and  the  similarity  of  the  re- 
sults seems  to  bear  out  the  above  opinion  as 
to  the  accuracy  of  budget  statistics.  The 
Federal  Government,  various  state  labor 
bureaus,  committees  working  under  the  di- 


THE  INCREASED  COST  OF  LIVING      99 

rection  of  settlement  houses,  and  private  in- 
vestigators have  all  contributed  data  relating 
to  budgets.  The  most  comprehensive  statis- 
tics on  this  subject  are  those  embodied  in 
the  Eighteenth  Annual  Report  of  the  United 
States  Commissioner  of  Labor  (1903)  based 
on  returns  from  11,156  families.  Probably 
the  most  careful  statistics  are  those  collected 
in  the  Greenwich  House  investigation  and  in 
the  Chapin  report  on  the  standard  of  living 
in  New  York.^ 

The  results  of  these  three  investigations  are 
strikingly  similar,  those  variations  which  do 
appear  being  explained  by  the  fact  that  con- 
ditions in  New  York  City  differ  from  those 
in  other  sections  of  the  country.  For  ex- 
ample, for  incomes  from  $800  to  $900,  the 
expenditure  for  food  varies  in  the  three  in- 
vestigations from  41.4  to  45.8  per  cent  of  in- 
come; for  rent,  from  17.1  to  20.7  per  cent; 
for  clothing,  from  10.3  to  14  per  cent;  and  for 
fuel  and  light  from  5  to  5.4  per  cent.^  These 
percentages  are  sufficiently  accurate  for  the 
purpose  of  applying  the  principle  of  the  in- 
creased cost  of  living.  What  is  needed,  how- 
ever, is  the  collection  of  budget  statistics  at 
frequent  intervals,  for  in  a  period  of  ten  or 

^  More,  Wage-Earners'  Budgets;  Chapin,  Standard  of  Living 
among  Workingmens  Families  in  Nem  York  City. 

^  Eighteenth  Annual  Report,  U.S.  Commissioner  of  Labor,  pp. 
585,  592;  More,  p.  58;  Chapin,  p.  70. 


100   DETERMINATION  OF  RAILWAY  WAGES 

more  years  the  consuming  habits  of  famihes 
may  undergo  such  a  change  that  the  former 
percentages  will  not  represent  the  true  propor- 
tion of  total  income  expended  for  a  given 
commodity.  Again,  there  should  be  a  classi- 
fication of  laborers,  and  a  separate  budget  for 
various  incomes  calculated  for  each  class.  It 
may  happen  that  railway  employees  expend 
a  larger  proportion  of  their  wages  on  cloth- 
ing and  rent  than  do  workmen  in  other  in- 
dustries.^ Such  differences  between  various 
classes  of  the  industrial  population  should 
be  taken  into  account  in  applying  the  princi- 
ple of  the  increased  cost  of  living,  for  varia- 
tions in  the  per  cent  of  total  income  expended 
for  a  given  commodity  will  be  reflected  in  the 
amount  of  the  advance  in  the  cost  of  living. 
Finally,  the  budget  statistics  should  cover  a 
large  number  of  families  in  both  the  East, 
West,  and  South,  for,  just  as  there  are  varia- 
tions in  consumption  between  different  classes 
of  labor  and  for  different  amounts  of  income, 
so  there  are  consumption  variations  between 
sections  of  the  country  due  to  climatic  and 
other  local  conditions. 

The  only  available  statistics  of  the  changes 

*  For  example,  conductors  must  spend  an  excess  over  the  average 
for  rent  and  clothes  on  account  of  the  number  of  layovers  at  the  end 
of  runs,  and  the  need  of  presenting  a  good  appearance  while  on 
duty  (E.  C.  Robbins,  "The  Railway  Conductors,"  Columbia 
University  Studies,  Vol.  xl.  No.  1,  pp.  89-90). 


THE  INCREASED  COST  OF  LIVING    101 

in  the  retail  prices  of  food  from  year  to  year 
are  those  pubhshed  by  the  United  States 
Bureau  of  Labor  Statistics.  In  the  railway 
arbitrations,  the  employees  and  the  employers 
usually  present  exliibits  based  on  these  sta- 
tistics; in  some  few  cases,  however,  the  rail- 
ways have  had  recourse  to  the  figures  of  the 
Bureau  of  Railway  Economics,  Dun's  and 
Bradstreet's  Agencies.  From  1890  to  1907 
the  price  indexes  published  in  the  bulletins 
of  the  United  States  Bureau  of  Labor  were 
based  upon  returns  from  sixty-eight  locali- 
ties for  thirty  staple  food  articles,  weighted 
according  to  the  average  consumption  of  the 
various  articles  in  workingmen's  families  as 
shown  by  the  Eighteenth  Annual  Report  of 
the  United  States  Commissioner  of  Labor. 
From  1907  on  the  indexes  were  based  only 
upon  fifteen  articles  of  food,  on  which  price 
quotations  were  collected  from  about  forty 
localities.^  Owing  to  the  criticism  that  it  was 
impracticable  to  calculate  the  real  advance  in 
the  cost  of  food  from  1890  down  to  the  pres- 
ent time,  on  account  of  the  fact  that  the  num- 
ber of  food  articles  was  not  the  same  for  the 
entire  period  of  years,  the  Bureau  recalcu- 
lated the  indexes  from  1890  on,  using  the  same 
fifteen  articles  of  food  for  the  earlier  dates 

^  For  method  of  calculating  the  old  index  numbers,  see  Bulletin, 
U.S.  Bureau  of  Labor  Statistics,  No.  156,  Appendix  A,  pp.  357-366. 


102  DETERMINATION  OF  RAILWAY  WAGES 

as  were  employed  as  the  basis  for  indexes 
after  1907.^  In  the  latest  bulletins  of  the 
Bureau  of  Labor  Statistics,  a  new  method  of 
computing  index  numbers  has  been  adopted, 
designed  to  show  changes  in  actual,  rather 
than  in  relative  prices,  and,  by  shifting  the 
base  from  the  average  of  1890-1899  to  the 
last  completed  year,  to  render  a  comparison 
with  prices  in  other  years  possible  without 
danger  of  miscalculation.^  Apart  from  food 
statistics,  the  Bureau  since  1907  has  col- 
lected data  concerning  the  retail  prices  of 
coal,  anthracite  and  bituminous,^  and  has  re- 
cently begun  the  gathering  of  gas  prices.* 

Food  and  coal,  then,  are  the  only  commodi- 
ties for  which  retail  price  statistics  over  a 
period  of  years  are  available,  and  these  two 
together  represent  approximately  only  thirty- 
five  per  cent  of  the  total  expenditure  in  work- 
ingmen's  families.^  It  is  evident,  therefore, 
that  the  railways'  assertion  that  the  increase 

^  This  change  made  in  Bulletin,  U.S.  Bureau  of  Labor,  No.  105. 

2  Bulletin,  U.S.  Bureau  of  Labor  Statistics,  No.  156,  pp.  5-14, 
Appendix  A,  pp.  357-380.  See  also  American  Economic  Review, 
December,  1915,  pp.  928-931. 

^  First  published  in  Bulletin,  U.S.  Bureau  of  Labor,  No.  105, 
pp.  27-28. 

4  Ibid.,  pp.  28-30. 

^  According  to  the  average  budget,  income  $851  (More,  p.  258), 
food  represents  an  expenditure  of  43.4  per  cent,  and  fuel  and  light, 
5.1  per  cent.  Since  the  food  articles  of  the  Bureau's  indexes  repre- 
sent only  about  two  thirds  of  the  total  expenditure  for  food,  the 
total  percentage  for  food  and  fuel  would  amount  to  about  35  per 
cent. 


THE  INCREASED  COST  OF  LIVING    103 

in  the  cost  of  living  cannot  be  determined 
with  any  degree  of  exactness  is  to  some  ex- 
tent justified.  Without  accurate  statistics  of 
the  retail  prices  of  food,  rent,  clothing,  fuel 
and  light,  which  together  comprise  almost 
eighty  per  cent  of  the  total  family  expendi- 
ture,^ it  is  impossible  to  use  to  the  best  ad- 
vantage the  principle  of  the  increased  cost  of 
living  in  arbitration  proceedings.  It  may  be 
well  to  quote  from  the  report  of  the  board  in 
the  arbitration  of  1913  involving  the  Southern 
Railway  and  its  maintenance  of  way  em- 
ployees in  order  to  show  to  what  expedients 
the  lack  of  proper  official  statistics  reduces 
arbitration  boards  when  attempting  to  find 
the  amount  of  the  advance  in  the  cost  of  liv- 
ing. After  obtaining  the  increase  in  food 
prices  from  the  bulletins  of  the  Bureau  of 
Labor,  the  board  assumed  that  on  ten  per 
cent  of  the  employees'  expenses  there  had  been 
no  increase;  assumed  again  that  eight  per 
cent  was  spent  on  shoes,  on  which  "we  gather 
from  evidence  there  has  been  the  large  aver- 
age increase  of  25  per  cent."  Then,  since 
"dry  goods  and  clothing"  was  the  "most 
comprehensive  and  representative"  of  the 
terms  used  in  the  employees'  exhibits,  the 

^  In  the  average  budget  income,  $8.51,  these  items  total  77.5 
per  cent:  food  43.4,  rent  19.4,  clothing  10.6,  light  and  fuel  5.1.  The 
remaining  items  are  insurance  3.9  per  cent  and  sundries  17.6  per 
cent. 


104   DETERMINATION  OF  RAILWAY  WAGES 

board  assumed  that  the  twelve  per  cent  in- 
crease in  that  item  might  well  be  applied  to 
the  forty  per  cent  of  expenditures  still  unac- 
counted for,  concluding  with  the  statement, 
*'This  calculation  is  not  scientific,  but  it  is 
the  best  we  can  do  with  the  insuflBcient  data 
before  us."  ^  It  must  be  said  that  this  board 
at  least  attempted  to  use  other  figures  than 
those  for  the  increases  in  the  prices  of  food, 
which,  one  is  given  to  understand  in  other 
exhibits  and  awards,  constitute  the  entire 
increase  in  the  cost  of  living.  The  statement 
of  Mr.  Perham,  the  Telegraphers'  represent- 
ative in  the  "Nickel  Plate"  Arbitration 
(1914)  that  "the  government  reports  upon 
the  subject  [cost  of  living]  are  scarcely  ade- 
quate for  a  consideration  of  this  subject,  al- 
though in  a  manner  they  are  informing"  ^ 
sums  up  the  value  of  the  existing  ofl[icial 
statistics  to  an  arbitration  board. 

There  is  urgent  need  for  the  regular  col- 
lection of  statistics  of  retail  prices  of  food  by 
the  Federal  Government  and  by  the  various 
state  labor  bureaus,  working  on  some  uni- 
form plan.  The  number  of  articles  selected 
should  be  greater  than  fifteen,  for  these  com- 
prise only  about  sixty-four  per  cent  of  the 
total  food  consumption,  and  therefore   the 

*  Southern  Railway  Arbitration  (1913),  Report  of  Board,  pp. 
8-10. 

»  "Nickel  Plate"  Arbitration  (1914),  Proceedings,  p.  131. 


THE  INCREASED  COST  OF  LIVING    105 

figures  now  existing  are  not  sufficiently  com- 
prehensive to  give  a  true  index  of  the  in- 
crease in  the  cost  of  food.  The  United  States 
Bureau  of  Labor  Statistics  is  now  endeavor- 
ing to  collect  price  data  on  thirteen  addi- 
tional articles  of  food,^  and  when  these  are 
included,  the  general  price  index  will  more 
adequately  represent  the  actual  advance  in 
food  prices.  Food  statistics  alone  do  not  indi- 
cate the  full  amount  of  the  cost  of  living,  for 
the  items  of  rent,  clothing,  fuel  and  lighting 
comprise  about  thirty-five  per  cent  of  the 
total  expenditure.^  The  Federal  Bureau  has 
already  published  fuel  and  light  statistics  and 
is  now  collecting  data  for  various  articles  of 
dress  and  house  furnishing.^  Nothing,  how- 
ever, has  been  done  in  regard  to  rents.  In 
1910,  the  Canadian  Department  of  Labour 
began  an  investigation  of  rents  of  representa- 
tive workingmen's  dwellings,  with  and  with- 
out sanitary  conveniences.  The  quotations 
for  these  are  taken  each  month  in  forty-five 
cities  of  10,000  population  and  upwards.^  It 
seems  that  this  method  might  be  applied 
with  good  results  in  the  United  States.   Be- 

'  Bulletin,  U.S.  Bureau  of  Labor  Statistics,  No.  156,  Appendix  A, 
p.  373. 

2  See  above,  p.  103  (note). 

'  Bulletin,  U.S.  Bureau  of  Labor  Statistics,  No.  156,  Appendix  A, 
p.  373. 

*  Department  of  Labour  (Canada),  "Wholesale  Prices  in  Canada, 
1911,"  p.  222. 


106    DETERMINATION  OF  RAILWAY  WAGES 

fore  the  principle  of  the  increased  cost  of 
living  as  a  basis  of  wage  advance  can  be  ap- 
plied satisfactorily  in  arbitration  proceed- 
ings, the  board  must  have  at  its  disposal  sta- 
tistics of  the  increase  in  the  prices  of  food, 
rent,  clothing,  fuel  and  light  over  a  period 
of  years,  so  that  it  may  determine  with  some 
exactness  what  has  been  the  actual  advance 
in  the  cost  of  living. 

As  to  statistics  showing  the  increase  in 
wages,  conditions  are  even  more  chaotic  than 
in  the  case  of  the  cost  of  living.  It  is  difficult 
to  determine  the  exact  wages  of  engineers, 
firemen,  conductors,  and  trainmen,  for  the 
method  of  payment  is  neither  the  pure  time 
nor  the  pure  piece  system.^  For  instance,  the 
passenger  engineers,  by  the  award  of  the 
recent  Western  Arbitration  Board  (1915), 
are  to  be  paid,  according  to  weight  on  drivers 
of  the  engine  used,  from  $4.30  to  $5.00  for 
a  day's  run,  that  is,  for  one  hundred  miles  or 
less,  or  six  hours  and  forty  minutes  or  less. 
Thus  on  a  run  of  less  than  a  hundred  miles, 
or  for  less  than  six  hours  and  forty  minutes 
duration,  the  wage  received  would  be  the 
same  as  if  the  full  distance  had  been  run  or 
the  full  time  worked.  On  the  other  hand,  if  the 
run  exceeds  this  distance  or  time,  overtime 

1  D.  A.  McCabe,  The  Standard  Rate  in  American  Trade  Unions, 
pp.  60-70,  72-76,  186  (note). 


THE  INCREASED  COST  OF  LIVING    107 

rules  apply  and  the  engineer  draws  pay  in  ex- 
cess of  the  minimum  rate  set  in  the  schedule. 
Thus,  an  engineer  working  on  the  same  run 
day  after  day,  might,  if  the  time  consumed 
were  greater  than  six  hours  and  forty  min- 
utes and  varied  from  day  to  day,  receive  a 
different  sum  for  each  day's  work.  His  total 
wage,  therefore,  cannot  be  determined  by 
multiplying  the  rate  by  the  number  of  days 
worked.  Further  confusion  arises  from  the 
fact  that,  in  unassigned  service,  an  engineer 
may  have  a  different  run  from  day  to  day, 
with  a  different  weight  engine,  or  again,  an 
engineer  may  be  laid  off  one  day  and  yet 
make  the  equivalent  of  two  days'  wages  the 
next. 

In  determining  the  increase  in  railway 
wages  for  the  purpose  of  ascertaining  whether 
wages  have  kept  pace  with  increasing  prices, 
the  question  arises  as  to  whether  wages  mean 
earnings  or  rates.  The  railways  maintain 
that  the  cost  of  living  argument  is  funda- 
mentally directed  to  the  establishment  of 
the  proposition  that  earnings  have  not  kept 
pace  with  the  increases  in  the  prices  of  com- 
modities, and  therefore  wages,  in  connection 
with  the  cost  of  living,  mean  earnings.^  The 
employees,  on  the  other  hand,  contend  that 

^  Western  Engineers  and  Firemen's  Arbitration    (1915),   Rail- 
ways' Brief,  pp.  23-25;  Proceedings,  pp.  7557-7558. 


108    DETERMINATION  OF  RAILWAY  WAGES 

the  computation  of  the  increase  in  wages 
should  be  based  on  the  assumption  that  wages 
mean  rates  of  pay,  and  that  the  high  earnings 
which  the  railways  show  for  the  men  are  a 
result  of  the  excessive  hours  worked.^  They 
claim  that  it  is  not  valid  to  assert  that  wages 
have  kept  pace  with  the  increase  in  prices,  if 
an  employee  must  work  continually  over  the 
time  set  for  the  minimum  day  in  order  to 
make  his  wages  bear  the  increased  prices  of 
commodities. 

This  argument  of  the  employees  seems  es- 
sentially fair,  but  it  is  impossible  to  determine 
the  advance  in  wages  of  a  class  of  employees 
in  a  district  as  large  as  the  West,  on  the  basis 
of  rates.  In  order  to  strike  an  average  of  the 
wages  of  engineers  on  a  rate  basis,  it  would  be 
necessary  to  weight  each  different  rate  by  the 
number  of  employees  receiving  it.  When  the 
number  of  rates  according  to  the  size  of  the 
locomotive,  and  the  number  of  employees  who 
may  operate  different  locomotives  from  day 
to  day  are  considered,  it  is  evident  that  no 
such  basis  for  computing  wages  can  be 
adopted.  In  the  Eastern  Engineers'  Arbitra- 
tion (1912)  the  employees  submitted  an  ex- 
hibit designed  to  show  the  percentage  in- 
crease in  wages  on  the  basis  of  rates  on  five 

^  Western  Engineers  and  Firemen's  Arbitration  (1915),  Proceed- 
ings, p.  7736. 


,THE  INCREASED  COST  OF  LIVING     109 

roads  in  the  Eastern  District.  On  only  one  of 
these  roads  —  the  Baltimore  and  Ohio  — 
were  they  able  to  estimate  the  percentage 
increase  from  1900  to  1910.^ 

The  railways  have  used  the  statistics  of 
"average  daily  compensation"  published  by 
the  Interstate  Commerce  Commission  to 
show  the  increase  in  the  earnings  of  employ- 
ees over  a  period  of  years.  These  statistics 
are  compiled  from  reports  of  the  carriers  to 
the  Commission,  and  the  average  daily  com- 
pensation is  determined  by  dividing  the  ag- 
gregate amount  paid  each  grade  of  employ- 
ment, engineers,  conductors,  etc.,  by  the 
total  number  of  days  worked  by  the  employ- 
ees of  that  grade.  The  number  of  days 
worked  is  determined  by  various  methods  on 
the  different  railways.  The  employees  have 
objected  strongly  to  the  use  of  these  sta- 
tistics on  the  ground  that  the  methods  for 
computing  the  number  of  days  worked  are 
so  numerous  as  to  preclude  the  possibility 
of  a  valid  comparison  between  one  road  and 
another.^  Again,  the  aggregate  compensa- 
tion includes  payments  for  overtime,  and 
thus  the  average  daily  compensation  rep- 
resents, not  the  rate  for  a  day's  work,  but 
the  earnings  of  employees  who  may  be  work- 

1  Eastern  Engineers'  Arbitration  (1912),  Engineers'  Exhibits,  67. 
*  Eastern  Firemen's  Arbitration  (1913),  Proceedings,  pp.  1700- 
1762. 


110    DETERMINATION  OF  RAILWAY  WAGES 

ing  considerably  over  the  minimum  day.^ 
It  is  claimed  further  that  the  figure  for  the 
average  daily  compensation  of  an  engineer, 
for  instance,  does  not  represent  a  true  aver- 
age, for  all  engineers  are  lumped  together,  — 
passenger,  through  freight,  local  freight, 
switching,  etc.,  —  and  no  account  is  taken  of 
the  various  rates  paid  to  engineers  within 
these  classes  of  service,  based  on  differences 
in  driver  weights.  Mr.  P.  H.  Morrissey, 
employees'  arbitrator  in  the  Eastern  Engi- 
neers' Arbitration  (1912)  characterized  these 
statistics  as  used  by  the  board  in  that  case 
as  "  insufficient,  unreliable,  inaccurate,  and 
misleading."  ^ 

These  objections  are  valid,  and  any  com- 
parison of  one  road  with  another,  or  any  use 
of  these  statistics  as  a  basis  for  calculating 
the  amount  of  compensation  received  by  the 
respective  grades  of  employment  would  be 
liable  to  serious  objection.  However,  it  seems 
that  they  may  be  taken  as  a  fair  index  of  the 
percentage  increase  in  general  railway  wages 
over  a  period  of  years,  and  that,  after  all,  is 
what  is  needed  for  the  application  of  the  in- 
creased cost  of  living.  The  railway  wage  sta- 
tistics of  the  Commission  would  be  of  much 
greater  service  in  arbitration  proceedings  if 

^  Eastern  Engineers'  Arbitration  (1912),  Report  of  Board,  p.  114. 
2  Ibid.,  p.  114. 


THE  INCREASED  COST  OF  LIVING     111 

some  one  method  of  computing  the  number 
of  days  worked  could  be  agreed  upon  and  used 
on  all  the  roads,  and  if  employees  could  be 
sub-classified  according  to  kind  of  service  — 
passenger,  through  freight,  etc.  If  these  two 
changes  were  made,  it  would  be  possible  to 
compare  the  roads  throughout  a  territory,  and 
to  determine  the  amount  of  increase  over  a 
period  of  years  in  the  wages  of  the  employees 
engaged  in  each  kind  of  railway  service.^ 

In  addition  to  the  difficulty  of  applying  the 
principle  of  the  increased  cost  of  living  on 
account  of  the  lack  of  adequate  statistics, 
other  drawbacks  to  its  application  have  been 
brought  forward  in  arbitration  proceedings. 
The  railways  have  questioned  whether  this 
principle  is  equally  applicable  in  concerted 
movements  as  well  as  in  those  disputes  in- 
volving only  one  road.  In  the  Western  En- 
gineers and  Firemen's  Arbitration  (1915)  it 
was  argued  that  in  a  proceeding  wherein  the 
award  was  to  be  made  applicable  to  appren- 
tices as  well  as  to  men  earning  as  much  as 
$3700  a  year,  the  board  could  not  work  out 

*  The  Interstate  Commerce  Commission  has  recently  made  radi- 
cal changes  in  its  statistics  of  railway  employment,  the  results  of 
which  will  appear  in  its  report  for  the  fiscal  year  ending  June  30, 
1915.  The  employees  are  classified  into  68  instead  of  18  occupa- 
tions and  some  of  the  more  important  grades  are  sub-classified  ac- 
cording to  the  kind  of  service  —  passenger,  freight,  yard,  etc.  The 
number  of  hours  instead  of  the  number  of  days  worked  is  to  be  re- 
ported in  the  future.  The  new  statistics  will  undoubtedly  be  of  much 
greater  value  than  those  formerly  published. 


112   DETERMINATION  OF  RAILWAY  WAGES 

a  conclusion  of  general  application  from  the 
premise  of  the  increased  cost  of  living.^  In 
the  Chicago,  Burlington  and  Quincy  Arbitra- 
tion (1914),  on  the  other  hand,  the  repre- 
sentative of  the  road  held  that  "arguments 
for  increases  in  rates  of  pay  based  upon  in- 
creased cost  of  living  should  be  heard  only  in 
concerted  or  general  movements  affecting  all 
individuals  in  a  particular  class  of  service."  * 
The  question  of  applicability  may  be  con- 
sidered from  the  vie^vpoint  of  the  territory 
concerned  or  the  character  of  the  employees 
involved.  As  to  the  territory,  it  may  be  said 
that  statistics  of  food,  rent,  etc.,  cannot  be 
gathered  from  every  town  or  section  in  the 
United  States.  But  if  official  statistics  are 
collected  covering  a  number  of  localities  in 
all  the  States,  a  sufficiently  accurate  estimate 
of  the  increased  cost  of  living  may  be  ob- 
tained for  any  locality,  state,  or  railway  dis- 
trict into  which  the  country  is  divided.  If  the 
statistics  cover  a  sufficient  area,  it  makes  no 
difference  whether  the  principle  of  the  in- 
creased cost  of  living  is  applied  in  a  single  or 
in  a  concerted  movement.  From  the  stand- 
point of  the  employees  concerned,  it  is  ob- 
vious that,  where  wages  are  so  different  in 

^  Western  Engineers  and  Firemen's  Arbitration  (1915),  Rail- 
ways' Brief,  p.  23. 

^  Chicago,  Burlington  and  Quincy  Arbitration  (1914),  Proceed- 
ings, pp.  94.93-9496,  9773. 


THE  INCREASED  COST  OF  LIVING    113 

amount  as  in  movements  involving,  for  in- 
stance, conductors  and  trainmen  or  all  grades 
of  engineers,  the  percentage  increase  in  the 
cost  of  living  is  not  the  same  for  all  employ- 
ees. It  is  possible,  however,  to  classify  con- 
ductors and  trainmen  and  other  employees 
into  income  groups,  the  percentages  of  food, 
rent,  etc.,  expenditure  of  which  may  be  found 
by  reference  to  budget  statistics.  The  per- 
centage advance  in  the  prices  of  food,  rent, 
etc.,  weighted  according  to  the  percentages 
of  expenditure  in  the  different  budgets,  will 
then  give  the  actual  percentage  increase  in 
the  cost  of  living  for  each  income  group.  The 
increased  cost  of  living  principle  should  be 
applied  uniformly,  account  being  taken,  how- 
ever, of  the  fact  that  the  percentages  to  total 
income  expended  for  various  items  vary  with 
income. 

Another  question  which  has  been  presented 
in  railway  arbitrations,  merely  as  a  possi- 
bility and  never  as  an  actual  fact,  is  whether 
wages  should  be  reduced  if  the  cost  of  living 
is  decreasing.  The  chairman  of  the  Board  of 
Conciliation  and  Investigation  in  the  dispute 
between  the  Canadian  Pacific  and  its  main- 
tenance of  way  employees  (1914)  held  that 
if  the  principle  of  the  increased  cost  of  living 
were  allowed  to  govern  wage  advances  logic 
demanded    a   proportionate   decrease  when 


114    DETERMINATION  OF  RAILWAY  WAGES 

living  costs  were  lessened.^  The  same  argu- 
ment was  brought  forward  by  the  Western 
railways  in  their  dispute  with  the  Firemen 
and  Enginemen  in  1910.^  It  has  been  argued 
that  "if  prices  fall  and  wages  remain  un- 
changed, the  cost  of  production  on  account 
of  wages  may  become  disproportionate  and 
the  crippling  of  industry  result."  ^ 

The  question  as  to  whether  or  not  wages 
should  decrease  in  proportion  to  the  decline 
in  prices  must  be  approached  from  two  an- 
gles, according  as  the  particular  decline  of 
prices  in  question  is  part  of  a  long  downward 
trend,  or  merely  an  incident  of  a  brief  period 
of  business  depression.  The  general  movement 
of  prices  has  shown  an  alternate  rising  and 
falling  trend  extending  ordinarily  over  a  con- 
siderable number  of  years.  For  instance, 
from  about  1789  to  1809  prices  rose  rapidly, 
but  there  followed  a  period  of  falling  prices 
lasting  until  1849.  In  that  year  another  up- 
ward trend  began  which  continued  for  about 
twenty-five  years,  only  to  be  broken  by  the 
long  period  of  falling  prices  lasting  from  1873 
to  1896.  Since  1896  there  has  been  a  remark- 
able advance  in  prices,  and,  from  all  appear- 

^  Canadian  Pacific  vs.  Maintenance  of  Way  Emploj'ees  (1914), 
in  Labour  Gazette  (Canada),  February,  1914,  p.  907. 

'^  Western  Firemen  and  Enginemen's  Arbitration  (1910),  Pro- 
ceedings, p.  2920. 

'  Department  of  Labour  (Canada), "  Wholesale  Prices  in  Canada," 
1890-1909,  p.  435. 


:  THE  INCREASED  COST  OF  LIVING    115 

ances,  the  end  is  not  yet.^  Within  these  long 
time  movements,  which  may  be  explained  by 
changes  in  money  and  in  trade,  occur  periodic 
short  time  fluctuations,  due  in  the  main  to  the 
cumulative  effect  of  contraction  in  demand, 
lessened  profits,  tight  money,  and  increased 
business  costs.  With  alternate  periods  of 
prosperity,  crisis,  and  depression,  prices  rise, 
remain  stable  for  a  time,  then  fall  only  to 
rise  again,  the  same  phenomena  being  re- 
peated over  and  over.  Thus,  price  move- 
ments are  of  two  distinct  kinds,  and  falling 
prices,  therefore,  may  be  an  incident  either 
of  the  long  time  downward  trend  or  of  the 
short  time  period  of  business  depression. 

An  equivalent  and  simultaneous  decrease 
in  wages  and  prices  does  not  appear  to  violate 
the  principle  upheld  in  the  preceding  pages  — 
the  maintenance  of  the  standard  of  living. 
A  reduction  in  usages  corresponding  to  the 
decline  in  the  prices  of  those  commodities 
consumed  by  the  average  workingman's  fam- 
ily will  not  low^er  the  laborer's  standard  of 
living.  In  spite  of  this  fact,  however,  em- 
ployees have  always  strenuously  resisted 
any  reduction  in  money  wages,  even  though 
they  may  be  fully  aware  of  the  decline  in 
prices.  This  resistance  is  based  upon  the 
failure  of  employees  to  distinguish  clearly  the 

^  Irving  Fisher,  The  Purchasing  Power  of  Money,  pp.  240-246. 


116   DETERMINATION  OF  RAILWAY  WAGES 

difference  between  real  and  money  wages. 
That  a  decline  in  wages  corresponding  to 
the  decrease  in  prices  will  not  lower  the  stand- 
ard does  not  appeal  to  the  reason  of  the  aver- 
age employee,  for  the  decline  in  prices  at  best 
is  something  intangible  and  not  easily  com- 
puted, whereas  a  reduction  in  money  wages 
is  definite  and  can  be  measured  exactly  by 
the  employee  himself.  For  this  reason,  a  re- 
duction in  wages  corresponding  to  the  de- 
cline in  prices  is  never  accepted  without  pro- 
test from  the  men,  and  is  always  attended 
with  serious  friction  between  employers  and 
employees.  This  opposition  on  the  part  of 
labor  has  had  its  effect  upon  wage  reductions 
during  long  periods  of  falling  prices,  for  there 
has  always  been  a  noticeable  lag  in  wages, 
so  that  at  the  end  of  the  period  wages  have 
not  been  reduced  by  the  same  ratio  as  the 
decline  in  prices.^  A  long  downward  trend 
of  wages,  therefore,  has  tended  to  operate  as 
a  gain  to  labor  and  to  bring  about  an  ad- 
vance in  the  standard  of  living. 

Arbitration  boards  should  keep  the  above 
tendencies  in  mind  when  they  are  confronted 
with  demands  for  reductions  in  wages  cor- 
responding to  the  decline  in  prices.  They 
should  be  influenced  by  the  desire  to  advance 

^  Report  of  Massachusetts  Commission  on  Cost  of  Living,  1910, 
pp.  88-89. 


THE  INCREASED  COST  OF  LIVING    117 

the  standard  of  living  of  any  grade  of  em- 
ployees whenever  possible,  and  since  a  period 
of  declining  prices  offers  an  opportunity  of 
effecting  this  desirable  result  by  refusing  a 
proportionate  decrease  in  wages,  boards  may 
well  adopt  this  principle,  especially  as  friction 
between  employers  and  employees  may  be 
avoided,  and  as  the  boards'  award  will  cor- 
respond closely  to  the  normal  relation  of 
wages  and  prices  evident  in  former  periods  of 
declining  prices.  No  definite  rule  as  to  the 
proper  ratio  of  decrease  in  wages  can  be  for- 
mulated, for  the  movement  of  wages  must 
depend  upon  the  relative  abruptness  of  the 
decline  in  prices.  The  most  that  can  be  said 
is  that  the  wage  decrease,  if  any,  should  be 
at  a  smaller  ratio  than  the  decline  in  prices. 
When  the  price  movement  is  a  short  time 
decrease  accompanying  business  depression, 
wage  reductions  on  the  basis  of  decreased 
cost  of  living  should  not  be  allowed.  In  the 
preceding  chapter  it  was  shown  that  a  wage 
reduction  during  periods  of  depression  would 
operate  to  counteract  certain  forces  of  read- 
justment upon  which  the  hope  of  business  ex- 
pansion and  of  relief  from  stagnation  largely 
depends.  Furthermore,  since  periods  of  de- 
pression are  usually  temporary  and  are  fol- 
lowed by  a  rapid  rise  in  prices  during  busi- 
ness revival,  wage  reductions  would  simply 


118   DETERMINATION  OF  RAILWAY  WAGES 

occasion  immediate  demands  for  increases  in 
wages  based  on  the  increased  cost  of  living 
caused  by  the  return  of  business  prosperity. 
Therefore,  during  periods  of  business  de- 
pression, reductions  in  wages  demanded  on 
the  ground  of  declining  living  costs  should  be 
disallowed. . 

The  underlying  principle  of  the  increased 
cost  of  living  argument  is  the  maintenance 
of  the  standard  of  living.  Taken  by  itself, 
therefore,  it  has  no  claim  as  a  basis  for  de- 
termining what  share  of  the  product  right- 
fully belongs  to  the  laborer;  it  merely  aims 
to  keep  real  wages  at  a  constant  level.  Thus, 
the  assumption  upon  which  it  rests  is  that 
the  wage  received  prior  to  the  demand  for 
advance  is  a  fair  and  adequate  wage.  Theo- 
retically viewed,  the  principle  of  the  in- 
creased cost  of  living  equalizes  real  wages 
from  year  to  year,  and  provides  no  advance 
in  the  employees'  standard  of  living.  As  an 
actual  fact,  however,  the  standard  of  living 
of  any  grade  of  employees  is  rarely  station- 
ary, for  even  though  the  income  factor  re- 
mains constant,  there  is  a  possibility  of  de- 
velopment in  the  other  factors  governing  the 
standard  of  living,  the  net  result  of  which  will 
be  an  advance  in  the  employees'  condition. 
The  increase  of  scientific  knowledge,  inven- 


THE  INCREASED  COST  OF  LIVING    119 

tions,  and  more  effective  methods  of  produc- 
tion have  served  to  better  the  hving  condition 
of  society  in  general.  Rapid  strides  in  medi- 
cine and  sanitation,  and  improvements  in 
phimbing  and  drainage  have  made  healthy, 
sanitary  surroundings  the  rule,  and  not  the 
exception.  Improvements  in  the  methods  of 
producing  and  distributing  gas  and  elec- 
tricity have  so  cheapened  these  commodities 
that  they  are  fast  displacing  oil  and  other 
means  of  illumination.  A  few  years  ago,  only 
the  rich  could  purchase  automobiles;  now 
prices  are  decreasing  steadily,  and  these 
luxuries  are  within  the  reach  of  successively 
lower  classes  in  the  scale  of  economic  wel- 
fare. Amusements  are  many  and  cheap,  and 
the  increasing  numbers  of  municipal  parks 
and  free  playgrounds  give  ample  opportunity 
to  all  classes  for  heathful  recreation.  These 
are  but  a  few  instances  of  the  influence  of  the 
advance  in  civilization  upon  the  standard  of 
living.  Even  if  there  be  no  increase  in  real 
wages,  the  advantages  accruing  to  laborers 
through  the  advance  in  civilization  will  serve 
to  better  the  general  conditions  under  which 
they  live. 

The  influence  of  the  class  of  society  to 
which  an  individual  belongs  and  of  the  per- 
sonal factor  upon  the  standard  of  living  has 
already  been  mentioned.    Ambition  to  rise 


120   DETERMINATION  OF  RAILWAY  WAGES 

out  of  his  class,  more  efficient  management 
of  the  income,  greater  sobriety  and  industry- 
all  serve  to  advance  a  workingman's  stand- 
ard of  living.  The  development  of  these 
qualities  is  the  aim  of  labor  organizations,  and 
their  educational  value  to  the  country  can 
scarcely  be  overestimated.  Some  of  the  rail- 
way brotherhoods  help  their  members  to  be- 
come more  efficient  by  conducting  technical 
courses  through  the  medium  of  their  monthly 
publications.^  The  high  standard  of  morals 
and  health  required  for  membership  in  the 
brotherhoods;  the  intimate  association  of 
members  and  their  wives  in  the  locals;  and 
the  suggestions  exchanged  in  the  Women's 
Auxiliaries  cannot  help  but  increase  efficiency 
in  home  management  and  make  for  a  wiser 
expenditure  of  income.  The  railway  organi- 
zations are  doing  a  splendid  work  in  develop- 
ing their  members.  President  W.  G.  Lee,  of 
the  Brotherhood  of  Railroad  Trainmen,  in 
an  address  at  a  convention  of  the  Brother- 
hood of  Locomotive  Firemen  and  Engine- 
men,  said  that  when  "ambition  demands  a 
better  living  and  better  social  conditions,  the 
workman  usually  finds  the  way.  The  organ- 
izations of  labor  have  educated  their  members 
in  the  way  of  better  living  standards  with  all 

*  For  example,  see  the  monthly  magazines  of  the  Brotherhood  of 
Locomotive  Engineers  and  the  Brotherhood  of  Firemen  and  Engine- 


THE  INCREASED  COST  OF  LIVING    121 

that  accompanies  them,  and  they  have  also  pro- 
vided the  way  to  secure  these  advantages."^ 

As  to  the  effect  of  the  appHcation  of  the 
principle  of  the  increased  cost  of  living  upon 
the  public,  it  is  claimed  that  it  will  result  in 
a  continuous  round  of  wage  demands,  which 
will  be  passed  on  to  the  public  in  the  form  of 
higher  prices.  The  chairman  of  the  Board  of 
Conciliation  and  Investigation  in  the  dis- 
pute involving  the  Canadian  Pacific  and  its 
maintenance  of  way  employees  (1914)  stated 
that  *'the  increased  cost  of  living  is,  unfortu- 
nately, a  thing  that  seems  to  thrive  upon 
itseK;  the  increased  cost  of  living  requires 
higher  wages  and  higher  wages  increase  the 
cost  of  production,  and  the  increased  cost  of 
production  causes  increased  cost  of  living."  ^ 
Thus,  when  the  necessity  for  a  new  wage  in- 
crease arises,  the  employer  must  recoup  him- 
self by  increasing  the  price  of  his  products. 
Numerous  employers  of  labor  testified  before 
the  Massachusetts  Commission  on  the  Cost 
of  Living  that  the  underlying  cause  of  the 
rapid  advance  in  the  cost  of  commodities 
was  the  labor  organizations  which  forced 
up  costs  of  production  by  increasing  the 
wages  of  their  members.^  That  higher  wages 

^  Locomotive  Firemen's  Magazine,  August,  1910,  p.  240. 
2  Labour  Gazette  (Canada),  February,  1914,  p.  906. 
'  Report  of  Massachusetts  Commission  on  the  Cost  of  Living, 
1910,  pp.  303,  438,  442-443. 


122    DETERMINATION  OF  RAILWAY  WAGES 

mean  increased  prices  is  the  opinion  of  many 
investigators  of  the  workings  of  the  Austra- 
lasian arbitration  acts/  and  some  question 
the  expediency  of  these  acts  for  that  reason. 
Other  authorities,  however,  hold  that  in- 
creasing wages  are  not  necessarily  reflected 
in  increased  prices.  Both  the  Massachusetts 
Commission  and  the  Select  Senate  Committee 
on  Wages  and  Prices  reported  that  labor 
unions,  although  advancing  wages  and  re- 
ducing hours,  had  not  apparently  been  a 
serious  factor  in  contributing  towards  ad- 
vancing prices ;  but  it  was  stated  that  a  well- 
grounded  opinion  as  to  the  actual  effect  of 
wages  upon  the  cost  of  production  could  not 
be  expressed.^  According  to  Australasian 
experience,  the  influence  of  higher  wages 
upon  prices  has  varied  greatly  with  different 
industries,  and  the  general  opinion  there  is 
that  increases  in  wages  have,  to  a  certain  ex- 
tent, increased  prices,  but  that  it  is  impossible 
to  say  whether  the  increase  has  been  pro- 
portionate.^ 

*  Aves,  Wages  Boards,  p.  56,  Appendix,  pp.  184-187;  G.  S.  Beeby, 
"Artificial  Regulation  of  Wages  in  Australia,"  Economic  Journal, 
Vol.  XXV,  No.  99,  p.  327. 

^  Report  of  Massachusetts  Commission  on  the  Cost  of  Living, 
1910,  pp.  471-472;  Select  Senate  Committee  on  Wages  and  Prices, 
Vol.  I,  pp.  122-123. 

'  Aves,  p.  102;  F.  A.  Russell,  "Industrial  Arbitration  in  New 
South  Wales,"  Economic  Journal,  Vol.  xxv.  No.  99,  pp.  344-354; 
Harvard  Law  Reinew,  Vol.  xxix.  No.  1,  p.  37;  Bulletin,  U.S.  Bureau 
of  Labor  Statistics,  No.  167,  pp.  136-137. 


THE  INCREASED  COST  OF  LIVING     123 

In  theory,  it  may  be  said  that  increased 
wages  will  increase  costs,  and  consequently 
prices,  if  the  efficiency  of  labor  remains  con- 
stant and  if  no  economies  in  production  are 
made  to  offset  the  advanced  costs.  Con- 
versely, increased  prices  will  not  result  if 
the  efficiency  of  labor  is  increased  by  the 
advanced  wage,  and  if  the  increasing  costs 
of  production  force  employers  to  introduce 
more  efficient  methods  of  operation.  There 
is  a  limit,  however,  to  the  extent  to  which  in- 
creased labor  efficiency  and  skillful  manage- 
ment can  be  carried,  and  when  this  limit  is 
reached,  if  the  industry  is  to  be  carried  on, 
any  increase  in  wages  will  of  necessity  be 
shifted  to  the  public  in  the  form  of  advanced 
prices.^ 

Many  railway  officials  claim  that  the  rail- 
ways of  the  United  States  have  reached  this 
limit,  and  that  operating  costs  have  advanced 
so  rapidly  on  account  of  incessant  wage  de- 
mands, increased  taxes,  large  expenditures 
for  terminals,  and  for  various  safety  appli- 
ances and  regulations  required  by  law,  that, 
if  the  roads  are  to  continue  in  operation  with- 

^  Report  of  Massachusetts  Commission  on  the  Cost  of  Living, 
1910,  pp.  472-473;  Hooker,  "The  Course  of  Prices  at  Home  and 
Abroad,"  Journal,  Royal  Statistical  Society,  December,  1911,  p.  15; 
LaughUn,  "Causes  of  the  Changes  in  Prices  since  1896,"  Proceed- 
ings, American  Economic  Association,  23d  Annual  Meeting,  De- 
cember, 1910,  p.  35. 


124    DETERMINATION  OF  RAILWAY  WAGES 

out  serious  loss  in  efficiency,  rates  must  be 
advanced.^  Railway  labor  has  also  urged  in- 
creased rates  for  the  roads,  because  the 
brotherhoods  believed  that  their  members 
would  stand  a  better  chance  for  wage  ad- 
vances if  the  revenues  of  the  railways  were 
increased.^    - 

It  is  impossible  to  state  whether  or  not  the 
railways  have  actually  reached  the  point 
where  rates  must  be  increased  and  where 
labor  cannot  be  made  more  productive  and 
no  further  economies  introduced.  Rates  in 
the  Eastern  District  have  recently  been 
raised  five  per  cent.  The  exhibits  of  the  West- 
ern railways  in  the  Engineers  and  Firemen's 
Arbitration  of  1915  showed  that  in  three 
years  ending  June  30,  1913,  $660,000,000  had 
been  spent  for  additions,  extensions,  and  for 
increasing  the  efficiency  of  train  movements 
by  grade  reductions,  elimination  of  curves, 
heavier  rails,  etc.^  In  the  Western  Advance 
Rate  Case  (1910)  President  McCrea,  of  the 
Pennsylvania,  testified  that  in  spite  of  the 

1  Eastern  Firemen's  Arbitration  (1913),  Proceedings,  p.  2481; 
Advanced  Rate  Hearings  (1910),  S.  Doc.  No.  725,  61st  Cong.,  3d 
Session,  pp.  292,  4297,  4346;  F.  H.  Dixon,  pp.  245,  252;  Railway 
Age  Gazette,  Vol.  lvii.  No.  19,  pp.  865-866. 

2  Western  Engineers  and  Firemen's  Arbitration  (1915),  Pro- 
ceedings, p.  7741;  The  Railroad  Trainman,  July,  1912,  p.  637; 
Locomotive  Firemen's  Magazine,  September,  1910,  p.  423. 

'  Western  Engineers  and  Firemen's  Arbitration  (1915),  Rail- 
ways' Brief,  pp.  105-106. 


THE  INCREASED  COST  OF  LIVING     125 

wage  advances,  that  road  had  been  able  to 
pay  regular  dividends  and  to  lay  aside  a  large 
surplus  by  introducing  such  economies  as 
grade  reductions,  larger  locomotives,  and 
cars  of  greater  capacity.^  In  view  of  the  re- 
cent rate  advances,  and  of  the  large  expendi- 
tures of  the  roads  for  more  eflScient  opera- 
tion, and  of  the  fact  that  at  present  the  rail- 
ways are  overwhelmed  with  shipments  for  the 
countries  at  war  in  Europe,  it  seems  unlikely 
the  application  of  the  increased  cost  of  liv- 
ing principle  as  a  basis  of  wage  advance  will 
necessarily  result  in  the  payment  of  higher 
rates  by  the  public. 

The  question  of  the  ability  of  the  railways 
to  pay  wage  advances  based  on  the  increased 
cost  of  living  principle  has  come  before  nu- 
merous arbitration  boards  in  Canada  and  in 
the  United  States.  The  attitude  of  the  boards 
in  the  two  countries  has  been  very  different. 
The  usual  practice  in  the  United  States  has 
been  to  deny  the  existence  of  any  relation 
between  wages  and  railway  earnings,  and 
profitable  and  unprofitable  roads  alike  have 
been  forced  to  pay  similar  wages  and  to  grant 
identical  increases.  In  Canada,  on  the  other 
hand,  the  boards  have  frequently  cut  down 
wage  advances  or  have  disallowed  them  alto- 
gether on  the  ground  that  the  road  is  not  in  a 

*  Western  Advance  Rate  Case  (1910),  Vol.  iv,  p.  2298. 


126    DETERMINATION  OF  RAILWAY  WAGES 

strong  financial  condition.  In  periods  of  busi- 
ness depression,  the  custom  in  Canada  has 
been  to  dismiss  the  demands  of  the  employees 
and  to  recommend  their  consideration  at  some 
more  opportune  time. 

In  times  of  normal  business  activity,  the 
inability  of  the  roads  to  pay  wage  advances 
based  on  increased  living  costs  should  not  be 
considered,  for  the  maintenance  of  the  stand- 
ard of  living  is  of  paramount  importance  not 
only  to  the  grade  of  employees  concerned  but 
to  the  Avelfare  of  the  whole  nation.  The 
effect  of  such  action  on  the  part  of  arbitra- 
tion boards  would  be  either  to  force  a  few 
employers  out  of  business,  or,  if  the  entire 
industry  were  at  the  limit  where  any  increase 
in  wages  meant  an  increase  in  prices,  to  place 
an  additional  burden  upon  the  public.  It 
seems  that  the  effect  of  either  of  these  even- 
tualities upon  the  well-being  of  the  nation  as 
a  whole  will  be  less  harmful  than  a  reduction 
in  the  standard  of  living. 

During  periods  of  business  depression,  de- 
mands for  wage  advances  based  on  the  in- 
creased cost  of  living  principle  are  not  likely 
to  be  presented,  for  prices  are  usually  de- 
clining at  such  times.  If  the  depression  occurs 
during  one  of  the  long  time  upward  move- 
ments of  prices,  it  may  happen  that,  even 
taking  into  account  the  fall  of  prices  due  to 


THE  INCREASED  COST  OF  LIVING     127 

the  depression,  there  is  an  increase  in  the  cost 
of  hving  since  the  last  wage  adjustment,  and 
the  employees  may  be  entitled  to  a  wage  ad- 
vance in  spite  of  the  business  depression.  An 
advance  in  wages  on  the  basis  of  the  increased 
cost  of  living,  however,  should  not  be  granted 
during  periods  of  business  depression.  These 
are  temporary  phenomena,  and  employees 
should  hold  over  their  demands  until  a  more 
propitious  time.  Railway  employees,  as  a 
rule,  have  refrained  from  requesting  in- 
creases during  periods  of  depression.  Thus, 
after  the  formation  of  the  Eastern  Associa- 
tion of  General  Committees  of  the  Conduc- 
tors and  Trainmen  in  1907  and  the  formula- 
tion of  a  notice  to  be  served  on  the  railways 
early  in  1908,  it  was  decided  to  defer  action 
until  a  more  opportune  time  and  the  de- 
mands were  not  made  until  January,  1910.^ 
A  circular  letter  of  the  Southern  Association 
of  the  same  brotherhoods  distributed  in  1905 
said,  "It  is,  of  course,  necessary  always  to 
give  proper  consideration  to  business  condi- 
tions and  the  appropriateness  of  the  time  at 
which  requests  are  preferred."  ^  In  periods 
of  business  depression,  therefore,  employees 
would  best  serve  their  own  interests  by  hold- 
ing  over  their   demands   until  a  favorable 

'  Proceedings,  Railway  Conductors,  1903,  pp.  89-96. 
2  Ibid.,  1905,  pp.  SO-81. 


128   DETERMINATION  "OF  RAILWAY  WAGES 

opportunity  presents  itself,  and  if,  during 
periods  of  depression,  demands  are  made  on 
the  basis  of  the  increased  cost  of  Hving,  arbi- 
tration boards  should  refuse  to  grant  any  in- 
creases. 


CHAPTER  IV 

INCREASED  PRODUCTIVE  EFFICIENCY 

In  the  majority  of  the  arbitrations  under 
the  Erdman  and  Newlands  Acts,  the  railway 
employees    based   their   demands   for   wage 
advances  upon  the  principles  of  standardiza- 
tion, the  living  wage,  and  the  increased  cost 
of  living.    In  the  Denver  and  Rio  Grande 
Arbitration,    November    1,    1910,    increased 
productivity  arising  out  of  improvements  in 
the  train  machine  was  brought  forward  as  a 
basis  of  wage  advance,  and  from  that  time 
on  the  principle  of  increased  productive  eflS- 
ciency  has  held  a  strikingly  important  posi- 
tion in  succeeding  arbitrations.  Standardiza- 
tion aims  to  establish  a  standard  rate  within 
a  given  area  in  order  to  prevent  less  prosper- 
ous roads  from  paying  wages  lower  than  the 
standard.    The  principle  of  the  living  wage 
contemplates  the  grant  of  compensation  to 
low-paid  men  sufficient  to  secure  the  normal 
standard  of  living.   The  basic  aim  of  the  in- 
creased cost  of  living  principle  is  to  prevent 
a  reduction  in  real  wages  and  to  maintain  the 
standard  of  living  of  all  grades  of  employ- 
ment.  Increased  productive  efficiency,  how- 
ever, the  railway  employees  claim,  is  a  posi- 


130    DETERMINATION  OF  RAILWAY  WAGES 

tive,  constructive  principle  for  securing  to 
the  employees  a  proper  measure  of  partici- 
pation in  economic  advancement.  As  Mr. 
W.  S.  Stone,  President  of  the  Brotherhood  of 
Locomotive  Engineers,  says,  "It  is  used  to 
designate  an  economic  right  and  a  principle 
of  economic  justice."  ^ 

The  principle  of  increased  productive  effi- 
ciency has  its  foundation  in  the  advancing 
productive  capacity  of  the  train  machine. 
Within  the  past  ten  or  fifteen  years  the  size 
and  power  of  locomotives,  the  capacity  of 
freight  cars,  the  average  tonnage  of  freight 
trains,  and  the  average  length  of  both  freight 
and  passenger  trains  have  increased  enor- 
mously. In  1910  the  average  freight  car  ca- 
pacity in  the  Eastern  District  had  increased 
28.6  per  cent  over  1902,^  and  the  tractive 
power  of  locomotives  on  all  railways  in- 
creased 48  per  cent  from  1902  to  1914.^  From 
1902  to  1911  the  average  freight  train  load  in 
the  Eastern  District  increased  from  264  to 
nearly  460  tons  or  an  advance  of  over  25  per 
cent.^    In  1902  the  average  number  of  cars 

^  Western  Engineers  and  Firemen's  Arbitration  (1915),  Pro- 
ceedings, p.  7747. 

2  Eastern  Firemen's  Arbitration  (1913),  Supplemental  Report  of 
International  President,  p.  1134. 

'  Bulletin,  Bureau  of  Railway  Economics,  No.  66,  p.  48;  No.  81, 
p.  41. 

*  Eastern  Conductors  and  Trainmen's  Arbitration  (1913),  Rail- 
ways' Brief,  p.  54. 


INCREASED  PRODUCTIVE  EFFICIENCY    131 

to  a  passenger  train  was  3.95,  in  1911  it  was 
5.23.^  There  is  no  doubt  that  the  train  ma- 
chine is  more  productive  now  than  a  decade 
ago,  for  the  increased  size  of  locomotives, 
cars,  and  trains  has  permitted  the  carriage  of 
a  greater  tonnage  or  of  a  greater  number  of 
passengers  in  one  train  movement.  This  in- 
creased productive  capacity  has  resulted  in 
large  advances  in  revenues.  In  1913  the 
operating  revenues  of  the  railways  of  the 
United  States  totaled  over  three  billion  dol- 
lars, in  1900  about  one  and  a  half  billions.^ 
It  is  true  that  other  factors  have  contributed 
to  this  vast  revenue  gain;  for  example,  the 
increase  in  business,  more  efficient  office 
methods,  improved  terminal  facilities,  in- 
creased rapidity  and  safety  of  train  move- 
ments through  the  elimination  of  curves  and 
the  reduction  of  grades,  and  the  installation 
of  interlocking  and  block  signals.  The  in- 
creased productive  capacity  of  the  train  ma- 
chine itself,  however,  is  chiefly  responsible  for 
the  advance  in  revenues. 

These  revenue  gains,  of  course,  have  been 
made  possible  by  the  increase  in  railway  out- 
put, the  larger  number  of  tons  and  passengers 
transported   by  means  of  the  more  efficient 

^  Eastern  Conductors  and  Trainmen's  Arbitration  (1913),  Rail- 
ways' Brief,  p.  14. 

^  Statistics  of  Railways  of  the  United  States,  Reports  of  Inter- 
state Commerce  Commission,  1900,  p.  72;  1913,  p.  48. 


132   DETERMINATION  OF  RAILWAY  WAGES 

train  machine.  Thus,  if  the  eflBciency  of  any 
train  on  a  given  run  is  increased  by  the  sub- 
stitution of  a  locomotive  of  greater  tractive 
power  and  cars  of  larger  capacity,  the  result 
is  an  increase  in  the  output  of  that  train  and 
in  the  revenue  received  from  that  one  train 
movement. 

The  employees  claim  that  if  the  efficiency 
of  the  train  machine  is  increased,  the  effi- 
ciency of  those  employees  in  any  way  con- 
nected with  its  operation  is  increased  in  a 
like  degree,  for,  as  the  railway  is  receiving 
a  greater  number  of  ton  miles  and  passenger 
miles  per  train,  so  it  is  receiving  a  greater 
number  of  ton  miles  and  passenger  miles  per 
train  crew.  Therefore,  the  employees  assert, 
since  they  are  more  productive  than  for- 
merly, their  increased  productive  efficiency  to 
the  railway  should  be  recognized  by  participa- 
tion in  the  increased  output  to  which  they 
have  directly  contributed.  The  fundamental 
claim  of  the  employees,  then,  is  that  they 
should  participate  in  revenue  gains  accord- 
ing to  their  respective  contributions  to  in- 
creased output.  Thus,  President  W.  S.  Stone 
in  the  Western  Engineers  and  Firemen's 
Arbitration  (1915)  said  that  "rates  of  pay 
should  be  adjusted  to  the  value  of  the  con- 
tribution in  terms  of  output,  and  a  corre- 
sponding participation  given  to  employees  in 


INCREASED  PRODUCTIVE  EFFICIENCY    133 

the  value  of  the  output";^  and  again,  *'If  we 
are  to  have  a  proper  measure  of  economic 
well-being  and  advancement,  ...  it  is  evident 
that  the  principle  of  productive  efficiency 
must  be  recognized  in  fixing  wage  payments, 
and  the  financial  or  corporate  control  of  the 
transportation  industry  must  be  so  regu- 
lated and  adjusted  to  democratic  institutions 
that  a  proper  measure  of  participation  in 
revenue  gains  may  be  made  possible  to  rail- 
road employees."  ^ 

This  fundamental  principle  of  participa- 
tion in  revenue  gains  according  to  specific 
contribution  to  output  is  applicable  to  all 
railway  employees  either  remotely  or  di- 
rectly concerned  with  the  operation  of  the 
improved  train  machine.  The  contribution 
to  increased  output  of  each  grade  of  railway 
employment  is  to  be  determined,  each  em- 
ployee of  that  grade  receiving  a  share  of  the 
total  increased  output  imputable  to  his  grade 
of  employment.  The  train  service  employees, 
however,  —  the  engineers,  conductors,  fire- 
men, and  trainmen  —  those  directly  con- 
nected with  the  operation  of  the  improved 
train  machine,  are  to  receive  in  addition  to 
the  share  of  increased  output  imputable  to 
each  of  these  grades  by  reason  of  their  in- 

^  Western   Engineers   and   Firemen's   Arbitration    (1915),   Pro- 
ceedings, pp.  7745-7746. 
2  Ibid.,  p.  7747. 


134    DETERMINATION  OF  RAILWAY  WAGES 

creased  productive  eflSciency,  a  further  share 
in  revenue  gains,  measured  by  the  increased 
labor,  risk,  and  responsibiUty  which  the  opera- 
tion of  larger  locomotives  and  trains  entails 
upon  these  particular  grades  of  railway  labor. 
The  conductors  and  trainmen  assert  that 
with  the  larger  cars  in  service  they  have  more 
passengers  or  more  tons  of  freight  in  their 
charge  and  that  their  responsibility  is  cor- 
respondingly increased.  The  firemen  claim 
that  locomotives  of  greater  tractive  power 
require  the  shoveling  of  more  coal;  and  the 
engineers  maintain  that  the  larger  the  loco- 
motive, the  more  complicated  the  mechanism 
under  their  control,  and  the  larger  the  train, 
the  greater  the  number  of  passengers  and  the 
amount  of  freight  for  which  they  are  re- 
sponsible. 

Increased  labor,  risk  or  responsibility  occa- 
sioned by  the  improvement  in  the  train  ma- 
chine as  a  part  of  the  principle  of  productive 
efficiency  concerns  the  train  service  em- 
ployees only,  and  it  is  used  solely  as  an  argu- 
ment for  the  payment  to  the  train  service 
employees  of  a  larger  relative  share  in  the 
revenue  gains  than  that  due  to  other  grades 
of  railway  labor,  whose  work,  hazard,  and 
responsibility  are  not  increased  by  larger 
locomotives,  cars,  and  trains.  This  point 
was  clearly  presented  in  the  Western  Engi- 


INCREASED  PRODUCTIVE  EFFICIENCY    135 

neers  and  Firemen's  Arbitration  (1915),  in 
which  the  position  of  the  employees  was 
stated  to  be  "that  all  railroad  employees, 
whether  their  work  increased  or  not,  and 
whether  they  were  remotely  or  directly  con- 
nected with  improved  operating  conditions, 
should  participate  in  revenue  gains,"  and  in 
addition  "that  those  classes  of  employees 
who  bore  the  direct  burden  and  responsi- 
bility of  the  increased  productive  efficiency, 
such  as  the  engineers  and  firemen  in  railroad 
operations,  should  have  a  proportionately 
larger  share."  ^ 

It  has  been  necessary  to  go  into  some  detail 
in  the  explanation  of  the  employees'  con- 
ception of  increased  productive  efficiency  on 
account  of  the  difference  of  opinion  as  to  the 
real  meaning  which  they  attach  to  it.  Rail- 
way representatives  have  referred  to  it  as  an 
"elusive  phrase"  ^  on  the  ground  that  it  is 
sometimes  "treated  in  the  employees'  evi- 
dence as  wholly  independent  of  the  question 
of  increased  labor  and  responsibility,  and  at 
other  times  as  arising  out  of  or  caused  by 
such  added  labor  and  responsibility."  ^  Coun- 
sel for  the  Western  roads  in  the  recent  arbi- 
tration involving  the  Engineers  and  Firemen 
stated  that  "  the  whole  question  of  productive 

*  Western   Engineers   and   Firemen's   Arbitration   (1915),   Pro- 
ceedings, p.  7731. 

2  Ibid.,  Railways'  Brief,  p.  4.  ^  Ibid.,  Railways'  Brief,  p.  4. 


136   DETERMINATION  OF  RAILWAY  WAGES 

efficiency,  in  its  last  analysis,  comes  down  to 
the  simple  question :  Has  there  been  a  change 
in  labor  or  responsibilities  of  the  engineer 
and  firemen  during  the  period  under  discus- 
sion?" ^ 

This  erroneous  view  of  the  employees'  idea 
of  the  principle  of  increased  productive  effi- 
ciency is  the  natural  consequence  of  the  in- 
volved and  conflicting  statements  in  their 
briefs  and  exhibits.  Thus,  in  the  Eastern 
Firemen's  Arbitration  (1913)  the  increase  in 
labor  was  made  the  fundamental  point  in  the 
argument  ^  and  in  the  Conductors  and  Train- 
men's Arbitration  of  the  same  year,  in- 
creased productive  efficiency  was  considered 
to  be  the  outcome  of  the  greater  hazards  in- 
cident to  the  handling  of  larger  cars  and  ton- 
nage.^ The  principle  of  increased  productive 
efficiency  was  not  fully  developed  and  clearly 
defined  in  these  earlier  arbitrations.  It  did 
not  receive  accurate  and  explicit  formulation 
until  the  Western  Engineers  and  Firemen's 
Arbitration  in  1915.  In  this  case,  the  em- 
ployees denied  the  identity  of  wage  demands 
based  on  increased  productive  efficiency  and 
on  increased  labor,  risk,  and  responsibility,  it 

^  Western  Engineers  and  Firemen's  Arbitration  (1915),  Proceed- 
ings, pp.  7525,  7558;  Railways'  Brief,  p.  14. 

2  Eastern  Firemen's  Arbitration  (1913),  Supplemental  Report 
of  International  President,  Employees'  Brief,  p.  1237. 

'  Eastern  Conductors  and  Trainmen's  Arbitration  (1913),  Em- 
ployees' Final  Brief,  pp.  6-7. 


INCREASED  PRODUCTIVE  EFFICIENCY    137 

being  stated  that  the  men  expected  the  in- 
vention of  new  machinery  and  of  labor  sav- 
ing devices  to  lessen  their  labor  and  responsi- 
bility, but  at  the  same  time  they  expected  to 
share  in  the  gains  made  possible  by  industrial 
advancement.^  At  the  present  time  there  is 
no  room  for  doubt  as  to  the  meaning  which 
the  employees  attach  to  the  phrase  increased 
productive  efficiency.  It  need  only  be  borne 
in  mind  that  this  principle  is  based  upon  the 
increased  productive  capacity  of  the  train 
machine,  and  that  the  primary  effect  of  this 
is  an  advance  in  the  revenues  which,  the  em- 
ployees claim,  should  be  shared  among  all  rail- 
way workers  according  to  their  respective 
contributions  to  increased  output. 

In  the  following  pages,  therefore,  by  in- 
creased productive  efficiency  is  meant  solely 
participation  in  revenue  gains  according  to 
specific  contribution  to  increased  output. 
Increased  labor,  risk,  and  responsibility,  in 
reality,  have  no  connection  with  the  under- 
lying principle  involved  in  the  employees' 
argument.  They  have  been  considered  by  the 
train-service  employees  as  a  part  of  their 
argument  for  participation,  because  both 
their  claims  for  participation  and  for  wage 
advances  on  account  of  increased  labor,  risk 

1  Western   Engineers   and   Firemen's   Arbitration    (1915),   Pro- 
ceedings, pp.  7730-7731,  2247-2£^8. 


138   DETERMINATION  OF  RAILWAY  WAGES 

and  responsibility,  find  their  ultimate  basis 
in  the  introduction  of  the  improved  train  ma- 
chine. It  is  probable,  however,  that  changes 
may  occur  in  the  conduct  of  transportation, 
other  than  those  connected  with  the  intro- 
duction of  larger  locomotives,  cars,  and  trains, 
which  may  affect  the  labor,  risk  and  responsi- 
bility of  other  grades  of  employment  as  well 
as  of  the  train-service  men.  For  this  reason, 
therefore,  arguments  for  wage  advances  based 
on  the  principle  of  increased  labor,  risk,  and 
responsibility  may  be  presented  by  all  rail- 
way employees,  entirely  apart  from  any  ar- 
gument based  on  increased  productive  effi- 
ciency. Confusion  is  avoided,  consequently, 
by  treating  the  former  principle  as  a  basis  of 
wage  advance  entirely  separately  from  in- 
creased productive  efficiency,  and  this  plan 
is  adopted  in  the  following  pages  —  the  dis- 
cussion of  increased  productive  efficiency 
being  followed  by  a  treatment  of  increased 
labor,  risk  and  responsibility. 

The  attitude  of  the  railways  toward  the 
principle  of  increased  productive  efficiency 
discloses  some  of  the  most  convincing  ob- 
jections to  it.  It  will  be  unnecessary  to  de- 
vote attention  to  the  claim  of  the  roads  that 
recent  advances  in  pay  have  fully  compen- 
sated employees  for  any  productivity  added 
by   the   improved   train   machine.    This   is 


INCREASED  PRODUCTIVE  EFFICIENCY    139 

merely  a  question  of  fact  and  has  no  bearing 
whatever  upon  the  vahdity  of  increased  pro- 
ductive efficiency  as  a  principle  of  wage 
advance.  The  railways  maintain  that  the 
participation  of  employees  in  revenue  gains 
according  to  their  contribution  to  increased 
output  is  inequitable,  because  there  is  no 
tangible  relation  between  the  work  of  the 
employees  and  increased  output.  The  in- 
crease in  railway  product  or  output  measured 
in  terms  of  ton  or  passenger  miles  depends 
(1)  upon  increased  traffic  and  (2)  upon  the. 
increased  capacity  of  the  train  machine,  and 
to  these  two  factors  employees  contribute 
nothing. 

(1)  Increased  traflSc  is  a  result  of  the  nat- 
ural growth  of  the  country  tributary  to  the 
various  lines,  of  the  location,  development, 
and  encouragement  of  new  industries  in  this 
territory,  and  of  the  working  out  of  favorable 
traffic  relations  with  other  lines  at  points  of 
interchange.  The  roads  claim  that  executives 
of  the  industrial,  traffic,  and  operating  de- 
partments originate,  increase,  and  handle 
this  traffic,  and  the  activity  of  employees  has 
no  tangible  relation  whatsoever  to  the  vol- 
ume of  business  or  to  the  revenues  received.^ 

(2)  Furthermore,    output    is    conditioned 

^  Chicago,  Burlington  and  Quincy  Arbitration  (1914),  Proceed- 
ings, pp.  9504-9505;  Western  Engineers  and  Firemen's  Arbitration 
(1915j,  Railways'  Brief,  pp.  6-7. 


140   DETERMINATION  OF  RAILWAY  WAGES 

upon  the  capacity  of  the  train  machine,  and 
increases  in  this  capacity  depend  in  great 
measure  upon  improved  equipment  and  more 
eflficient  loading  of  freight  or  handhng  of  pas- 
sengers. Large  sums  of  money  have  been 
spent  upon  improvements  in  the  plant,  loco- 
motives of  greater  tractive  power,  and  cars 
of  larger  capacity.  The  introduction  of  these 
has  been  made  possible  by  the  credit  of  the 
railways,  and  the  employees  have  no  connec- 
tion with  railway  credit.^  As  to  more  eflBcient 
loading,  the  roads  claim  that  this  is  entirely 
under  the  control  of  officers  in  the  operat- 
ing and  traffic  departments,  who,  working 
in  conjunction  with  shippers,  establish  car- 
load minima  and  bring  about  the  more  effi- 
cient loading  of  trains.  According  to  orders, 
the  employees  handle  a  short  or  long  train, 
empty  or  loaded  to  its  full  capacity,  badly 
or  efficiently  loaded.  Train  crews,  therefore, 
the  roads  assert,  have  no  influence  in  de- 
termining the  number  of  passenger  or  ton 
miles  produced.  Since  increased  output  is 
a  result  of  increased  traffic  and  capacity  of 
trains,  and  since  employees  contribute  noth- 
ing to  these  factors,  the  railways  argue  that 
no  logic  can  justify  the  participation  of  em- 
ployees in  the  revenue  gains  resulting  from 

^  Chicago,  Burlington  and  Quincy  Arbitration  (1914),  Proceed- 
ings, p.  9504. 


INCREASED  PRODUCTIVE  EFFICIENCY    141 

this  increased  output.  Employees  have  no 
relation  to  output,  for  *'they  produce  train 
and  locomotive  miles,  not  ton  and  passenger 
miles."  1 

But,  even  if  it  be  admitted  that  a  rela- 
tion between  employees  and  increased  output 
does  exist,  the  railways  contend  that  there 
is  no  reasonable  method  of  determining  how 
much  of  the  increase  in  ton  or  passenger  miles 
is  due  to  the  respective  contributions  of  the 
several  grades  of  employees,  of  capital,  and  of 
managerial  efficiency.  If  train  service  em- 
ployees contribute  to  increased  output,  then 
so  do  track  foremen,  station  agents,  train 
dispatchers,  machinists,  car  builders,  general 
managers,  and  stockholders  and  bondhold- 
ers who  contribute  to  the  funds  from  which 
are  made  the  payments  for  improved  equip- 
ment.^ The  railways  suggest  that  the  state- 
ments of  employees  would  lead  to  the  belief 
that  all  the  increase  in  railway  revenues  had 
been  due  to  the  energy,  loyalty,  and  skill  of 
the  employees.^  The  roads  assert  that  if  it 
be  admitted  that  employees  should  share  in 
increased  output,  a  fair  division  must  be 
made,  and  the  employees'  exhibits  are  ab- 

^  Chicago,  Burlington  and  Quincy  Arbitration  (1914),  Proceed- 
ings, pp.  9502-9503. 

^  Eastern  Conductors  and  Trainmen's  Arbitration  (1913),  Re- 
port of  Board,  pp.  70-71. 

'  Chicago,  Burlington  and  Quincy  Arbitration  (1914),  Proceed- 
ings, p.  9500. 


142   DETERMINATION  OF  RAILWAY  WAGES 

solutely  barren  of  any  information  which 
would  enable  an  arbitration  board  to  de- 
termine how  much  of  the  increase  in  output 
could  be  attributed  to  the  increased  produc- 
tivity of  the  several  grades  of  employees, 
to  the  additional  capital  investment,  and  to 
increased  managerial  efficiency.^  Thus,  the 
railways  claim  that  the  principle  of  increased 
productive  efficiency  attempts  to  establish 
a  relation  between  employees  and  increased 
output,  when  no  such  relation  exists;  and, 
even  if  it  did  exist,  the  absence  of  any  fair 
means  of  calculating  the  respective  contribu- 
tions of  the  factors  would  render  the  applica- 
tion of  the  principle  impossible. 

No  definite  statement  of  the  position  of 
arbitration  boards  in  regard  to  the  princi- 
pie  of  increased  productive  efficiency  can  be 
made,  for  a  sufficient  number  of  boards  have 
not  dealt  critically  with  this  principle.  In 
the  Eastern  Conductors  and  Trainmen's 
Arbitration  (1913)  the  employees  contended 
that  the  practice  of  double-heading  increased 
the  productivity  of  train  crews.  The  board 
ruled,  however,  that  the  increased  produc- 
tivity of  the  train  was  due  to  the  increased 
number  of  engines  and  not  to  any  measurable 
extent  to  the  contribution  to  extra  produc- 

^  Chicago,  Burlington  and  Quincy  Arbitration  (1914),  Proceed- 
ings, pp.  9499-9500;  Western  Engineers  and  Firemen's  Arbitration 
(1915),  Railways'  Brief,  p.  8. 


INCREASED  PRODUCTIVE  EFFICIENCY    143 

tivity  of  the  train  crew  itself.^  In  view  of  the 
ruhngs  of  this  board,  and  of  the  sHght  ad- 
vances granted  by  the  Western  Engineers  and 
Firemen's  Board  in  1915  in  the  face  of  a  vig- 
orous appeal  to  the  principle  of  increased 
productive  efficiency,  it  may  be  said  that  the 
tendency  of  arbitration  boards  at  present  is 
to  reject  this  principle  as  a  basis  of  wage 
advance. 

The  position  of  the  employees  and  of  the 
railways,  and  the  findings  of  the  boards  in 
regard  to  the  principle  of  increased  produc- 
tive efficiency  have  been  discussed;  it  re- 
mains to  consider  the  validity  of  this  prin- 
ciple and  the  possibility  of  its  application  in 
arbitration  proceedings. 

The  specific  productivity  theory  of  wages 
and  the  principle  of  increased  productive 
efficiency  are  based  upon  two  propositions 
—  the  existence  of  a  definite  relation  be- 
tween employee  and  product,  and  the  possi- 
bility of  measuring  the  amount  of  product 
imputable  to  labor.  Thus,  the  specific  pro- 
ductivity theory  asserts  that  the  amount  of 

^  Eastern  Conductors  and  Trainmen's  Arbitration  (1913),  Report 
of  Board,  p.  22.  This  board  separated  mine  service  from  through 
freight  service  and  awarded  a  higher  rate  to  mine  service.  The 
board  said:  "In  mine  service,  in  some  places,  in  which  a  train  is 
drawn  by  two  engines,  a  train  crew  is  sometimes  broken  up  in  order 
that  each  half  of  the  crew  may  serve  each  engine  separately.  In  such 
service,  the  prevailing  opinion  of  the  board  is  that  the  train  crew,  as 
distinguished  from  the  engine  crews,  does  contribute  to  the  in- 
creased productivity  of  the  train.  ..." 


144   DETERMINATION  OF  RAILWAY  WAGES 

compensation  received  by  labor  under  per- 
fect competition  tends  to  be  measured  by  the 
amount  of  product  which  its  marginal  unit 
produces.  Increased  productive  efficiency 
contends  that  the  amount  of  wage  advance 
which  the  laborer  should  receive  should  be 
measured  ,by  the  amount  of  the  increased 
product  which  he  has  produced.  Again,  both 
theory  and  principle  imply  that  the  specific 
contribution  of  the  laborer  to  the  entire  prod- 
uct, or  to  increased  product,  is  ascertainable. 
Attempts  have  been  made  to  demonstrate 
the  possibility  of  applying  the  specific  pro- 
ductivity theory  in  arbitration  proceedings,^ 
but  these  attempted  demonstrations  are  ex- 
tremely vague  and  inconclusive.  The  con- 
sensus of  opinion  in  regard  to  the  practical 
value  of  the  specific  productivity  theory  is 
that  it  offers  no  aid  whatever  to  arbitrators 
seeking  to  determine  the  proper  wage  of  the 
employees  under  consideration.^  Since  the 
principles  of  specific  productivity  and  in- 
creased productive  efficiency  are  virtually 
identical  in  their  underlying  principles,  it  may 
be  argued  that  the  latter  is  similarly  inap- 
plicable in  arbitration  proceedings.    It  will 

^  J.  B.  Clark,  Essentials  of  Economic  Theory,  Chap.  xxvi.  See 
also  Proceedings  of  the  American  Economic  Association,  1907,  3d 
series.  Vol.  vin.  No.  1,  pp.  22-28. 

^  Proceedings  of  the  American  Economic  Association,  pp.  30, 
34-35.  39. 


INCREASED  PRODUCTIVE  EFFICIENCY    145 

be  necessary,  however,  before  such  a  con- 
clusion can  fairly  be  reached,  to  examine  the 
validity  of  the  assumptions  upon  which  the 
principle  of  increased  productive  efficiency 
rests;  that  is,  the  existence  of  a  definite  rela- 
tion between  employees  and  increased  prod- 
uct, and  the  possibility  of  measuring  their 
precise  contribution  to  it. 

There  seems  to  be  no  doubt  that  the  total 
product  of  the  railways  is  a  result  of  the  joint 
activity  of  all  the  factors  of  production.  An 
increase  in  the  total  product  may  be  obtained 
by  an  increase  in  the  efficiency  of  any  one  of 
these  factors,  and  the  resulting  output  is  still 
a  joint  product.  It  is  evident,  therefore,  that 
employees,  along  with  the  other  factors  of 
production,  have  a  direct  relation  to  the  out- 
put, in  that  this  output  results  from  the  joint 
activity  of  all  the  factors.  It  does  not  follow, 
however,  because  there  is  a  greater  output 
apparent  after  an  increase  in  the  efficiency  of 
one  of  these  factors,  that  there  is  also  an  in- 
crease in  the  productivity  of  all  the  other 
factors.  Thus,  the  train  machine  may  be  im- 
proved so  as  to  permit  the  transportation  of 
an  increased  number  of  tons  or  passengers, 
but  the  increased  revenue  therefrom  can  be 
regarded  only  as  arising  out  of  the  improved 
train  machine,  and  not  from  any  increased 
productivity  of  the  train  crcAV  itself.    The 


146   DETERMINATION  OF  RAILWAY  WAGES 

product  of  the  improved  train  machine  is  still 
a  joint  product,  but  any  increase  in  this  prod- 
uct apparent  after  the  substitution  of  im- 
proved machinery  must  be  attributed  to  that 
factor;  and  employees,  simply  because  they 
are  working  with  a  more  efficient  machine, 
can  claim  no  share  in  the  increased  output  on 
the  ground  that  a  portion  of  this  increase 
is  due  to  their  greater  productivity.  It 
seems,  then,  that  the  railways'  contention, 
and  the  finding  of  the  Eastern  Conductors 
and  Trainmen's  Board  (1913)  that  the  in- 
creased product,  where  there  is  no  greater 
labor,  risk,  and  responsibility,  is  due  to  the 
increased  productivity  of  the  machine  itself 
and  not  to  the  greater  productive  efficiency 
of  the  employees,  is  the  only  logical  conclu- 
sion which  can  be  drawn  from  a  consideration 
of  the  relation  of  employees  to  increased 
output. 

When  an  attempt  is  made  to  ascertain  the 
precise  contribution  of  employees  and  of 
other  factors  to  the  increased  output,  the 
impossibility  of  applying  the  principle  of  in- 
creased productive  efficiency  becomes  an 
even  greater  obstacle  to  its  acceptance  as  a 
basis  of  wage  advance.  The  employees'  ex- 
hibits devote  little  attention  to  this  problem, 
being  limited  almost  entirely  to  showing: 
(1)  that  there  has  been  an  increase  in  output 


INCREASED  PRODUCTIVE  EFFICIENCY    147 

in  ton  and  passenger  miles  between  two 
periods;  ^  (2)  that  although  operating  costs 
have  increased,  there  has  been  more  than  a 
proportionate  advance  in  operating  revenues; 
(3)  that  increases  in  operating  costs  have  been 
due  to  factors  other  than  the  particular  grade 
of  labor  in  question;  (4)  that  after  these  in- 
creased operating  costs  have  been  paid,  a 
substantial  net  gain  in  revenue  has  been 
made  during  the  period  under  consideration; 
(5)  that  the  disposition  of  revenue  gains  has 
been  for  the  benefit  of  capital,  and  therefore 
labor  has  not  received  a  reward  for  its  in- 
creased productive  efficiency. 

The  crux  of  the  whole  question  is  the  pos- 
sibility of  measuring  the  contribution  of  em- 
ployees to  increased  output.  In  the  Eastern 
Firemen's  Arbitration  (1913)  the  employees 
arbitrarily  assumed  that  firemen  should  par- 
ticipate in  transportation  revenue  in  the  same 
proportion  as  the  ratio  of  their  total  com- 
pensation to  the  transportation  expenses. 
Thus,  the  ratios  of  the  wages  of  firemen  to 
the  cost  of  transportation  for  1902  and  1912 
were  found,  and  it  was  claimed  that  these 
percentages  of  the  transportation  revenues 
for  each  of  the  years  represented  the  revenue 
attributable   to  firemen   for   the   respective 

^  Western  Engineers  and  Firemen's  Arbitration  (1915),  Em- 
ployees' Brief,  p.  73;  Eastern  Firemen's  Arbitration  (1913),  Sup- 
plemental Report  of  International  President,  p.  413. 


148   DETERMINATION  OF  RAILWAY  WAGES 

years.  The  difference  in  the  revenue  imput- 
able to  firemen  respectively  for  1902  and  1912 
minus  the  increase  in  wages  in  that  period, 
therefore,  represented  the  portion  of  revenue 
gains  which  should  be  paid  to  the  employees 
of  that  grade.  ^  According  to  this  method 
only  those  -factors  in  production  appearing 
in  transportation  expense  accounts  would  re- 
ceive a  share  in  transportation  revenues. 
When  it  is  stated  that  transportation  ex- 
penses in  1912  comprised  only  about  fifty  per 
cent  of  total  operating  expenses  and  that 
transportation  revenues  amounted  to  nearly 
ninety-nine  per  cent  of  total  operating  rev- 
enues,^ it  is  at  once  clear  that  this  method 
is  unjust,  since  it  gives  no  participation  in 
increased  revenues  to  stockholders,  main- 
tenance of  way  labor,  etc.,  and  makes  no 
allowance  for  appropriations  to  additions, 
betterments,  surplus,  etc.,  —  these  items  not 
appearing  as  transportation  expenses.^  If  fac- 
tors are  to  share  in  the  revenue  gains  in  the 
proportion  that  they  enter  into  expenses,  it 
seems  fairer  to  calculate  the  share  of  increased 
income  on  the  basis  that  every  item  of  ex- 
pense is  entitled  to  receive  a  proportionate 
part. 

^  Eastern  Firemen's  Arbitration  (191 S),  Supplemental  Report  of 
International  President,  p.  426. 

2  Statistics  of  Railways  of  United  States,  1912,  pp.  55,  57. 
»  Ibid.,  p.  57. 


INCREASED  PRODUCTIVE  EFFICIENCY    149 

In  the  following  illustration  an  attempt  is 
made  to  determine  according  to  this  method 
the  increased  productive  efficiency  of  firemen 
on  all  railways  in  the  United  States  between 
the  years  1902  and  1912.  This  will  demon- 
strate, it  is  hoped,  that  in  order  to  arrive  at 
any  statistical  calculation  of  the  wage  ad- 
vance warranted  by  increased  productive 
efficiency,  such  arbitrary  assumptions  must 
be  made  as  to  render  the  statistical  method 
entirely  inapplicable.  The  object  of  the  cal- 
culation described  below  is  to  determine  the 
share  of  increased  output  attributable  to  fire- 
men between  the  years  named,  assuming  as 
the  share  of  firemen  in  revenue  gain,  the  ratio 
of  the  cost  of  firemen  to  total  expenses,  and 
applying  this  ratio,  not  to  transportation 
revenue,  but  to  income  from  all  sources. 
Since  the  firemen  are  to  participate  in  the 
output,  an  attempt  is  made  to  calculate  a 
unit  of  output  —  the  traffic  unit  suggested  in 
the  Western  Engineers  and  Firemen's  Arbi- 
tration (1915).^  This  unit  represents  both 
freight  and  passenger  traffic  according  to  the 
income  received  for  each  kind  of  service.  For 
example,  in  1912  a  ton  mile  yielded  in  in- 
come as  much  as  .381  passenger  miles.  Conse- 
quently, the  total  number  of  traffic  units  is 

^  Western  Engineers  and  Firemen's  Arbitration  (1915),  Proceed- 
ings, pp.  7738-773!). 


150    DETERMINATION  OF  RAILWAY  WAGES 

equal  to  the  sum  of  the  passenger  miles  and 
of  the  ton  miles  reduced  to  passenger  miles. 
The  income  of  the  railways  from  all  sources 
may  be  regarded  as  the  return  from  this  total 
of  traffic  units,  and  thus,  the  income  attrib- 
utable to  each  traffic  unit  may  be  determined. 
In  like  manjier,  the  total  expenses  of  the  rail- 
ways may  be  regarded  as  the  cost  of  produc- 
ing the  traflSc  units,  and,  therefore,  when  the 
cost  per  traffic  unit  is  ascertained,  the  net 
income  per  traffic  unit  may  be  determined. 

Total  expenses  in  1912  represented  88.2 
per  cent  of  the  total  income,  or  of  the  total 
number  of  traffic  units,  and  the  factors  rep- 
resented in  the  total  expense  accounts  pro- 
duce 88.2  per  cent  of  the  traffic  units.  The 
firemen  in  1912  received  2.31  per  cent  of  the 
total  expenses,  or  they  produced  2.31  per 
cent  of  the  traffic  units  attributable  to  the 
items  in  the  expense  accounts.  Since  the  net 
income  per  traffic  unit  has  been  determined, 
that  part  of  the  total  net  income  attribut- 
able to  firemen  may  be  calculated.  In  the 
accompanying  table  the  results  of  this  method 
for  the  years  1902  and  1912  are  shown. 

By  reference  to  the  table  it  is  seen  that  the 
firemen  produced  in  1912  over  two  billion  and 
a  quarter  traffic  units,  w^hile  in  1902  they  pro- 
duced about  one  billion  and  a  half.  Their 
productivity  from  1902  to  1912  increased. 


INCREASED  PRODUCTIVE  EFFICIENCY    151 

1902  1912 

Total  traffic  units  79,617,187,610    131,898,353,435 

Income   from   all 

sources $1,769,447,408      $2,995,596,275 

Income  per  traf- 
fic unit $.0222  $.0227 

Total  expenses. . .  $1,439,254,172      $2,643,321,113 

Cost    per    traffic 

unit $.0181  $.0200 

Net   income   per 

traffic  unit....  $.0041  $.0027 

Traffic  units  pro- 
duced   by    ex- 
pense factors..   64,728,773,536    116,445,864,009 
(81.3%)  (88.2%) 

Compensation   of 
firemen    (per 
cent    of    total 
expenses) .0234  .0231 

Traffic  units  pro- 
duced by  fire- 
men       1,514,653,300        2,375,499,459 

Contribution  of 
firemen  to  net 
income $6,210,079  $6,413,849 

therefore,  by  three  quarters  of  a  biUion  traf- 
fic units.  The  net  income  per  traffic  unit  in 
1912,  however,  was  only  twenty-seven  hun- 
dredths of  a  cent,  whereas  in  1902  it  amounted 
to  forty-one  hundredths  of  a  cent,  and  there- 
fore, although  the  firemen  produced  more 
traffic  units  in  1912  than  in  1902,  the  value 
of  these  to  the  railways  was  very  little  more 
in  the  latter  year,  the  figures  being  about 
$6,414,000  in  1912  and  $6,210,000  in  1902. 


152   DETERMINATION  OF  RAILWAY  WAGES 

The  increased  productive  efficiency  of  the  fire- 
men, then,  meant  only  a  $200,000  advance 
in  income,  and  the  amount  is  all  that  the 
firemen  can  claim  in  revenue  gains.  Even 
assuming,  then,  that  the  employees  should 
share  in  revenue  gains  resulting  from  the  in- 
creased productive  capacity  of  the  train  ma- 
chine, and  assuming  again  that  they  should 
participate  in  gains  in  the  proportion  that 
their  cost  bears  to  total  costs,  it  is  seen  that 
the  firemen  could  claim  only  a  negligible  fig- 
ure as  their  share  in  the  gains. 

The  method  described  above  takes  ac- 
count of  every  factor  in  production,  and  in 
this  respect,  is  much  fairer  than  the  method 
proposed  by  the  employees.  Yet  it  is  based 
upon  the  arbitrary  assumption  that  factors 
should  participate  in  income  according  to  the 
ratio  of  their  costs  to  total  expenses.  There 
is  no  reason  why  such  a  ratio  should  be  the 
measure  of  the  income  attributable  to  the 
factors.  It  might  easily  happen  that  in- 
creased taxes  would  raise  the  total  of  ex- 
penses to  so  high  a  figure  that  the  ratio  of 
firemen's  compensation  to  total  expenses 
would  be  lowered  to  such  a  point  as  to  show 
no  revenue  gain,  or  even  a  loss,  attributable 
to  them.  The  above  method,  also,  seeks 
merely  to  determine  the  amount  of  income 
due  to  all  firemen;  the  distribution  of  this 


INCREASED  PRODUCTIVE  EFFICIENCY    153 

sum  to  passenger,  through  and  local  freight 
firemen,  etc.,  according  to  the  increased  pro- 
ductive efficiency  of  each  class  within  that 
grade  of  employment  would  require  addi- 
tional arbitrary  assumptions  and  complicated 
calculations.  As  yet  no  method  has  been  de- 
vised which  can  fairly  resolve  the  joint  prod- 
uct into  its  elements  and  attribute  certain 
portions  of  the  product  to  the  productivity 
of  certain  factors.  Until  this  is  accomplished, 
it  is  impossible  to  measure  the  respective 
contributions  of  the  factors  of  production  to 
increased  output. 

The  principle  of  increased  productive  effi- 
ciency, as  the  employees  conceive  it,  that  is, 
participation  in  revenue  gains  according  to 
specific  contribution  to  increased  output, 
therefore,  cannot  be  accepted  as  a  valid  basis 
of  wage  advance;  for  the  claim  that  employ- 
ees contribute  to  increased  output  resulting 
from  the  improved  train  machine  is  unsub- 
stantiated, and  even  if  that  claim  were  sub- 
stantiated, the  lack  of  a  proper  method  of 
calculating  specific  contributions  to  increased 
output  precludes  any  possibility  of  applying 
the  principle  in  arbitration  proceedings. 

Increased  productive  efficiency,  however, 
presents  a  basis  for  wage  advances,  not  on 
the  ground  that  the  employees'  productivity 
is  increased  to  a  measurable  extent  by  operat- 


154    DETERMINATION  OF  RAILWAY  WAGES 

ing  an  improved  machine,  but  on  the  ground 
that  where  profits  are  advancing  as  a  result  of 
the  introduction  of  improved  machinery,  so- 
ciety may  be  benefited  through  a  general  ad- 
vance in  the  wages  of  labor,  attended  with 
the  least  amount  of  friction  between  em- 
ployers and  employees  and  with  the  least 
chance  of  additional  burden  upon  the  public. 
There  is  virtual  agreement  among  econo- 
mists and  investigators  that  a  great  part  of  the 
labor  force  of  the  country  is  receiving  a  wage 
below  the  amount  commonly  estimated  as  the 
requisite  of  a  normal  standard  of  living.  Any 
betterment  in  the  laborers'  condition,  there- 
fore, when  such  betterments  can  be  effected 
without  friction,  is  socially  advantageous. 
No  opportunity  should  be  lost  to  increase 
wages  and  to  advance  the  standard  of  living 
of  any  grade  of  employees  at  a  time  when  a 
wage  increase  can  be  made  without  placing  a 
direct  burden  upon  the  industry  concerned 
and  upon  the  public.  Arguments  based  on  the 
principle  of  increased  productive  eflSciency 
presuppose  increasing  revenues  from  year  to 
year  arising  out  of  the  introduction  of  more 
efiicient  machinery.  Therefore,  in  those  in- 
dustries in  which  improved  machinery  is  put 
into  operation,  wage  advances  may  be  granted 
without  endangering  the  stability  of  the  in- 
dustry and  without  shifting  the  amount  of  the 


INCREASED  PRODUCTIVE  EFFICIENCY    155 

wage  increase  upon  the  public  in  the  form  of 
higher  prices.  A  wage  advance  made  at  such 
times  would  reduce  the  friction  between  em- 
ployers and  employees  usually  engendered 
by  a  demand  for  increased  compensation,  and 
would  be  a  social  benefit  in  that  the  standard 
of  living  of  the  employees  involved  is  raised 
to  a  higher  level. 

This  application  of  the  principle  of  in- 
creased productive  efficiency  as  a  basis  of 
wage  advance  concerns  all  employees,  whether 
or  not  the  introduction  of  improved  machinery 
directly  affects  their  particular  occupation. 
The  entire  mass  of  labor  in  any  particular 
industry  may  properly  demand  a  share  in 
industrial  progress;  but  skilled  employees,  on 
account  of  the  fact  that  they  are  usually  bet- 
ter organized  than  unskilled,  and  that  im- 
proved machinery  is  more  likely  to  affect 
their  occupations  directly,  seem  to  stand  a 
better  chance  of  securing  a  wage  advance 
based  on  increased  productive  efficiency.  If 
this  be  so,  the  principle,  it  may  be  urged,  bene- 
fits skilled  labor  at  the  expense  of  unskilled. 
There  is  every  probability,  however,  that 
an  advance  in  the  standard  of  living  of  one 
grade  of  employment  will,  sooner  or  later, 
be  reflected  in  the  standards  of  other  grades 
within  the  industry  concerned.  The  setting 
of  a  new  and  higher  standard  of  living  for  any 


156    DETERMINATION  OF  RAILWAY  WAGES 

one  grade  of  labor  acts  as  a  goal  towards 
which  other  grades  instinctively  tend  to 
reach.  A  wage  increase  to  one  grade  is  usually 
followed  by  a  corresponding  collateral  in- 
crease throughout  the  industry,  for  the  main- 
tenance of  the  relative  differentials  between 
grades  of  labor  is  strongly  ingrained  in  every 
class  of  workmen.  It  may  be  said,  therefore, 
that  a  strict  application  of  the  principle  of 
increased  productive  efficiency,  in  the  long 
run,  will  benefit  all  grades  of  labor  in  the  in- 
dustry in  which  improved  machinery  is  in- 
troduced. 

Nor  does  it  follow,  as  employers  have  fre- 
quently claimed,  because  wages  have  been 
advanced  on  the  basis  of  increased  produc- 
tive efficiency  that  they  should  be  decreased 
when  the  large  revenues  accruing  from  the 
introduction  of  more  efficient  machinery  be- 
gin to  decline.  A  wage  advance  based  on 
increased  productive  efficiency  is  in  no  sense 
a  variable  amount  determined  yearly  by  the 
size  of  the  profits  earned  by  the  industry  or 
business  unit.  The  increase  in  wages  on  this 
principle  is  fixed  and  permanent,  and  once 
the  new  standard  of  living  has  been  set,  its 
maintenance  should  be  the  paramount  con- 
sideration. 

In  conclusion,  then,  a  permanent  wage  ad- 
vance may  be  based  upon  the  principle  of  in- 


INCREASED  PRODUCTIVE  EFFICIENCY    157 

creased  productive  efficiency,  not  because  of 
the  existence  of  a  definite,  measurable  rela- 
tion between  labor  and  the  increased  out- 
put arising  from  the  introduction  of  more 
efficient  machinery,  but  because  it  is  socially 
expedient  to  better  the  condition  of  labor, 
when  such  betterment  may  be  effected  with 
least  friction  between  employers  and  em- 
ployees, and  with  least  chance  of  passing  on 
the  wage  advance  to  the  public  by  increasing 
the  prices  of  commodities. 

The  employees*  argument  for  wage  ad- 
vances based  on  increased  labor,  risk,  and 
responsibility  is  much  less  confused  than  that 
based  on  the  principle  of  increased  produc- 
tive efficiency.  The  chief  wage  determinants 
which  employers  are  supposed  to  use  in  fix- 
ing the  amount  of  compensation  due  for  any 
given  occupation  are  the  degree  of  skill,  and 
the  amount  of  physical  labor  required,  the 
risk  and  responsibility  involved,  and  the  ad- 
vantages or  disadvantages  peculiar  to  the 
particular  kinds  of  work.  When  any  change 
in  the  manner  of  conducting  the  industry 
occurs  by  which  a  corresponding  change  ap- 
pears in  these  wage  determinants,  wage  ad- 
vances or  decreases  based  upon  these  changes 
seem  fair.  For  instance,  if  the  organization  of 
section  hands  on  the  railways  is  altered  by  a 


158    DETERMINATION  OF  RAILWAY  WAGES 

lengthening  of  sections  and  the  introduction 
of  efficiency  methods  by  which  the  amount  of 
physical  labor  and  mental  strain  is  increased, 
wage  advances  based  on  such  alterations  in 
the  nature  of  the  occupation  may  be  fairly 
demanded.  Similarly,  if  it  can  be  proved  that 
various  labor  saving  devices  and  better  sig- 
naling apparatus  have  lessened  the  physical 
labor  and  responsibility  of  engineers,  then 
a  demand  on  the  part  of  the  railways  that 
engineers'  wages  be  proportionately  reduced 
should  be  given  careful  consideration. 

It  is  evident  that  wage  demands  based  upon 
increased  labor,  risk,  and  responsibility  may 
be  brought  forward  by  all  grades  of  railway 
employees,  for  any  occupation  may  conceiv- 
ably be  affected  by  a  change  in  some  one  of 
these  elements  of  wage  determination.  The 
most  rapid  and  obvious  changes,  however, 
take  place  in  those  occupations  in  which  im- 
proved machinery  is  more  readily  introduced, 
and  on  the  railways  train  service  has  under- 
gone in  recent  years  an  almost  startling  al- 
teration, due  to  the  substitution  of  more 
powerful  locomotives,  electric  engines,  steel 
coaches,  automatic  couplers,  air  brakes,  and 
numerous  other  mechanical  appliances.  The 
train  service  employees,  of  course,  —  the  en- 
gineers, firemen,  conductors,  and  brakemen, 
etc.,  —  have  been  more  directly  affected  by 


INCREASED  PRODUCTIVE  EFFICIENCY    159 

these  changes  in  the  train  machine  than  any 
other  grades  of  railway  labor,  and  for  this 
reason,  increased  labor,  risk,  and  responsibil- 
ity as  a  basis  of  wage  advance  have  figured 
prominently  in  their  demands.  The  conduc- 
tors and  trainmen  hold  that  there  is  a  cer- 
tain amount  of  labor  and  degree  of  respon- 
sibility and  hazard  connected  with  every 
train  movement.  If  the  units  comprising  this 
train  are  increased,  then  these  elements  of 
labor,  risk,  and  responsibility  are  propor- 
tionately increased.  With  every  advance  in 
the  size  of  freight  or  passenger  cars  and  trains, 
the  conductors  and  trainmen  have  a  greater 
number  of  passengers,  or  a  larger  and  more 
valuable  freight  load  in  their  charge.^  The 
firemen  claim  that  the  introduction  of  larger 
locomotives  necessitates  more  labor  in  con- 
nection with  firing,^  and  the  engineers  assert 
that  larger  engines  have  increased  their 
labor,  because  the  mechanism  is  more  com- 
plicated. In  addition,  the  larger  trains  in  use 
require  greater  skill  in  stopping  and  starting, 
and  the  increasingly  heavier  traffic,  faster 

^  Eastern  Conductors  and  Trainmen's  Arbitration  (1913),  Pro- 
ceedings, Vol.  Ill,  p.  9. 

2  Western  Firemen  and  Enginemen's  Arbitration  (1910),  Pro- 
ceedings, pp.  2913-2914;  Denver  and  Rio  Grande  Arbitration  (1910), 
Proceedings,  pp.  26,  1426;  Eastern  Firemen's  Arbitration  (1913), 
Supplemental  Report  of  International  President,  p.  413;  Western 
Engineers  and  Firemen's  Arbitration  (1915),  Employees'  Brief,  p. 
73. 


160   DETERMINATION  OF  RAILWAY  WAGES 

speed,  and  greater  number  of  signals  have 
served  to  increase  the  engineers'  responsi- 
bility to  a  great  degree.^ 

The  railways  concede  that  when  progress 
in  railroading  brings  about  changes  by  which 
added  labor  and  responsibility  are  imposed 
upon  employees,  any  tangible  increase  in  this 
burden  should  be  reasonably  reflected  in  the 
amount  of  compensation.^  It  is  claimed,  how- 
ever, that  the  labor,  risk,  and  responsibility  of 
employees  have  been  decreased,  or  increases 
have  been  offset,  by  improvements.  Thus, 
engineers  are  said  to  have  less  work,  hazard, 
and  responsibility  on  account  of  the  installa- 
tion of  air  brakes,  improved  lubricators,  auto- 
matic Sanders  and  bell-ringers,  and  the  im- 
provement in  roadbeds,  rails,  and  signaling 
apparatus.^  In  the  case  of  firemen,  the  roads 
contend  that  the  introduction  of  superheaters 
and  mechanical  stokers  has  decreased  fuel 
consumption,  and  consequently,  the  amount 
of  labor  performed.^  Again,  the  roads  argue 
that  the  actual  labor  and  responsibility  of 

1  Eastern  Engineers'  Arbitration  (1912),  Proceedings,  p.  12;  Chi- 
cago and  Western  Indiana,  etc..  Arbitration  (1913),  Minutes, 
Vol.  II,  pp.  1317,  1398-1399;  Western  Engineers  and  Firemen's 
Arbitration  (1915),  Employees'  Brief,  p.  73. 

2  Western  Engineers  and  Firemen's  Arbitration  (1915),  Rail- 
ways' Brief,  p.  2. 

^  Eastern  Engineers'  Arbitration  (1912),  Railways*  Brief,  pp. 
46-47. 

*  Eastern  Firemen's  Arbitration  (1913),  Railways'  Brief,  pp. 
6-7. 


INCREASED  PRODUCTIVE  EFFICIENCY    161 

the  conductors  and  trainmen  are  lessened  by 
the  adoption  of  air  brakes,  automatic  couplers 
and  signals,  the  elimination  of  train  orders 
on  those  portions  of  the  road  operated  by 
signal  indicators,  and  the  placing  of  an  addi- 
tional man  on  many  trains  as  a  result  of  Full 
Crew  Laws.^  Thus,  the  railways  are  willing 
to  grant  advances  in  pay  to  train  service  and 
other  employees  in  order  to  compensate  for 
increased  labor,  risk,  and  responsibility,  pro- 
vided it  is  proved  that  these  elements  have 
not  been  affected  by  the  introduction  of  labor- 
saving  machinery  and  improved  mechanical 
appliances. 

American  arbitration  boards  agree  upon  the 
principle  that  any  increase  in  skill,  risk,  or  re- 
sponsibility by  reason  of  the  use  of  improved 
machinery  should  be  reflected  in  the  com- 
pensation of  the  employees  concerned.  The 
Eastern  Engineers'  Board  (1912)  recognized 
the  responsibility,  skill  and  efficiency,  mental 
strain  and  hazard  of  the  engineers,  and  agreed 
that  the  compensation  of  this  grade  of  em- 
ployees should  be  adequate  to  cover  these 
factors.^  In  the  case  of  the  Switchmen 
against  the  Chicago  Terminal  companies,  the 
board  found  that  the  skill  required  of  switch- 

1  Eastern  Conductors  and  Trainmen's  Arbitration  (1913),  Rail- 
ways' Brief,  pp.  7,  26. 

*  Eastern  Engineers'  Arbitration  (1912),  Report  of  Board,  pp. 
19-20. 


162    DETERMINATION  OF  RAILWAY  WAGES 

men  had  become  greater,^  and  the  Eastern 
Conductors  and  Trainmen's  Board  (1913) 
ruled  that  since  the  responsibihty  of  con- 
ductors had  been  increased  by  the  introduc- 
tion of  larger  trains,  they  should  receive  a 
greater  advance  than  that  granted  to  brake- 
men,  upon  whom  the  responsibility  of  a 
larger  train  did  not  rest.  The  same  board, 
however,  held  that  the  claim  of  increased 
labor  should  be  disallowed,  because  the  sub- 
stitution of  steel  for  wood  in  car  construction 
and  the  use  of  various  safety  appliances 
served  to  offset  the  claim  for  increased  labor.'' 
The  attitude  of  the  boards  may  be  charac- 
terized as  in  practical  agreement  with  the 
principle  involved  in  wage  demands  on  the 
basis  of  increased  labor,  risk,  and  responsi- 
bility, with  the  recognition  of  the  fact,  how- 
ever, that  modern  mechanical  inventions  may 
act  as  an  offset  to  any  increase  in  these 
factors. 

Increased  labor,  risk,  and  responsibility  as 
the  basis  of  wage  advance,  then,  have  been 
urged  by  the  employees,  conceded  by  the  rail- 
ways, and  applied  by  arbitration  boards  — 
their  acceptance  is  virtually  unanimous.  If 
it  can  be  proved  that  various  labor-saving 

^  Switchmen's  Arbitration  (1910),  Report  of  Board,  Records,  U.S. 
Board  of  Mediation  and  Conciliation,  File  No.  25. 

^  Eastern  Conductors  and  Trainmen's  Arbitration  (1913),  Re- 
port of  Board,  pp.  19-21. 


INCREASED  PRODUCTIVE  EFFICIENCY    163 

devices,  mechanical  inventions,  etc.,  have 
not  in  other  directions  effected  an  offset  to 
increased  labor  and  responsibility,  or  have 
not  served  actually  to  decrease  such  labor 
and  hazard,  then  there  is  no  reason  why 
wage  advances  on  this  basis  should  not  be 
granted. 

On  account  of  the  fact  that  increases  in 
labor,  risk,  and  responsibility  are  more  likely 
to  occur  in  those  occupations  connected  with 
the  operation  of  trains  than  in  other  grades  of 
railway  employment,  it  may  be  argued  that 
there  is  a  tendency  for  wage  advances  based 
on  this  principle  to  work  to  the  disadvan- 
tage of  other  railway  labor.  The  railways 
have  claimed  that  the  demands  of  the  train- 
service  employees  are  unfair  to  other  labor,  ^ 
and  the  dissenting  opinion  in  the  Georgia 
and  Florida  Arbitration  (1914)  strongly  con- 
demned the  engineers  and  firemen  for  ask- 
ing an  advance  which  would  necessitate  a 
reduction  in  the  pay  of  other  employees.^ 
There  is  a  prevalent  impression  that  the  com- 
pensation of  the  train-service  employees  is 
out  of  proportion  to  that  paid  to  other  grades 
of  railway  labor,  and  that  recent  wage  ad- 
vances to  the  members  of  the  brotherhoods 
have  been  made  at  the  expense  of  telegra- 

^  Eastern  Firemen's  Arbitration  (lf)lf5),  Railways'  Brief,  p.  62. 
^  Georgia  and  Florida  /irbitration  (1^)1  J:),  Report  of  Board,  p.  13. 


164    DETERMINATION  OF  RAILWAY  WAGES 

phers,  maintenance  of  way  men,  and  others.^ 
It  is  certain  that  the  wages  of  the  train-serv- 
ice employees  during  the  last  decade  have  in- 
creased more  rapidly  than  the  wages  of  other 
railway  workmen,  but  it  is  not  at  all  certain 
to  what  influence  this  has  been  due.  It  may 
be  accounted  for  by  the  more  obvious  or 
greater  relative  increases  in  labor,  risk,  and 
responsibility;  by  the  standardization  move- 
ment which  has  been  undertaken  on  a  larger 
scale  by  the  train-service  employees,  and 
which  always  involves  an  upward  move- 
ment of  the  standard  rate;  or  it  may  be 
ascribed  to  the  superior  organization  of  the 
four  brotherhoods.  The  employees,  both 
skilled  and  unskilled,  claim  that  the  strong 
organization  and  consequent  superior  bar- 
gaining power  of  the  train-service  employees 
have  secured  their  relatively  greater  in- 
creases, and  there  have  been  pleas  by  unor- 
ganized or  weakly  organized  railway  labor  to 
the  brotherhoods  for  an  indorsement  of  their 
demands,^  and  even  a  suggestion  of  a  defen- 
sive and  offensive  alliance  of  all  the  employees 
on  the  railways.^ 

Whatever  the  real  cause  of  the  widening 

^  Proceedings  of  the  American  Economic  Association,  1914,  3d 
Series,  Vol.  viii.  No.  1,  p.  46;  Advanced  Rate  Hearings  (1910),  S. 
Doc.  No.  725,  61st  Congress,  3d  Session,  Vol.  vi,  p.  4366. 

^  Locomotive  Firemen  and  Enginemen  s  Magazine,  April,  1907, 
pp.  545-546. 

3  Ihid.,  March,  1910,  p.  414. 


INCREASED  PRODUCTIVE  EFFICIENCY    165 

of  the  differential  between  skilled  and  un- 
skilled labor,  it  cannot  be  held  that  the  teleg- 
raphers, station  agents,  section  hands,  etc., 
would  have  received  greater  advances,  had 
not  the  train-service  employees  been  so  suc- 
cessful in  obtaining  their  demands.  This 
position  would  assume  the  existence  of  a  defi- 
nite wage  fund  destined  to  be  apportioned 
among  the  various  grades  of  railway  labor  in 
the  form  of  wage  increases,  with  the  result 
that  one  grade's  gain  would  be  the  others' 
loss.  Such  a  fund  has  never  existed.  It  is 
hardly  unjust  to  the  railways  to  say  that  they, 
like  other  employers,  rarely  pay  more  to  their 
labor  than  they  are  forced  to,  and  for  this 
reason,  the  widening  of  the  differential  be- 
tween the  train-service  and  other  employees 
must  be  attributed,  not  to  the  diversion  of 
the  just  increases  of  the  latter  to  the  more 
skilled  group,  but  to  the  relatively  stronger 
strategic  position  of  the  train-service  em- 
ployees as  a  consequence  of  their  more  highly 
developed  organization.^ 

Indeed,  there  is  every  likelihood  that  the 
existence  of  a  powerfully  organized  and 
highly  paid  group  of  labor  in  any  industry  — ■ 
such  as  the  engineers  and  conductors  in  rail- 
way transportation  —  far  from  being  detri- 

^  Eastern  Engineers'  Arbitration  (1912),  Employees'  Brief,  p.  17: 
Western  Engineers  and  Firemen's  Arbitration  (1913),  Proceed- 
ings, pp.  778^-7783. 


166    DETERMINATION  OF  RAILWAY  WAGES 

mental,  may,  in  the  long  run,  be  beneJScial  to 
the  interests  of  the  unorganized  and  low-paid 
workmen.  There  is  a  tendency  among  the 
employees  engaged  in  any  industry  to  keep 
a  close  watch  on  the  wages  paid  to  other 
grades  of  their  fellow  workmen,  and  the  dif- 
ferential between  their  wage  and  that  of 
some  other  grade  of  employment  is  jealously 
guarded.  Thus,  on  the  railways,  wage  in- 
creases usually  move  in  cycles,  an  advance 
to  engineers  being  followed  at  a  close  interval 
by  an  equivalent  advance  to  firemen,  con- 
ductors, and  trainmen.  Existing  differentials 
are  more  jealously  maintained  among  the 
train-service  employees  than  among  other 
railway  workers,  but  that  the  latter  do  aim 
to  maintain  their  relative  level  below  the 
skilled  groups  is  evidenced  by  their  refer- 
ences in  arbitration  proceedings  to  the  ad- 
vances made  to  train-service  employees  and 
by  their  claims  to  proportionate  advances.^ 
Thus,  an  increase  in  the  wages  of  a  highly 
paid  group  of  employees,  on  account  of  this 
tendency  to  maintain  existing  differentials, 
tends  to  put  in  motion  a  cycle  of  wage  ad- 
vances extending  to  all  grades  of  labor  in  the 
industry.  Therefore,  an  increase  in  wages  to 
train-service  employees,  based  on  increased 

*  Southern  Railway  Arbitration  (1913),  Report  of  Board,  pp. 
15-18;  Wheeling  and  Lake  Erie,  etc..  Arbitration  (1914),  Pro- 
ceedings, pp.  153-156. 


INCREASED  PRODUCTIVE  EFFICIENCY    167 

labor,  risk,  and  responsibility  arising  from 
the  improved  train  machine,  or  on  any  other 
principle  of  wage  advance  applicable  only  to 
those  grades  of  railway  labor,  may  ultimately 
result  in  an  advance  in  the  wages  of  the  un- 
organized or  poorly  organized  employees. 


CHAPTER  V 

PRINCIPLES  GOVERNING  THE  ARBITRAL 
DETERMINATION  OF  WAGES 

The  purposes  of  this  final  chapter  is  to  com- 
bine the  conclusions  reached  in  the  preceding 
pages  and  with  their  aid  to  suggest  some 
principles  which  may  govern  the  determina- 
tion of  wages,  not  only  in  railway  arbitra- 
tion but  also  in  the  settlement  of  disputes 
involving  employees  in  other  industries.  The 
bases  of  standardization,  the  living  wage,  the 
increased  cost  of  living,  increased  productive 
efficiency,  and  increased  labor,  risk,  and  re- 
sponsibility have  been  considered  as  isolated 
principles.  In  this  chapter  stress  will  be  laid 
more  upon  the  applicability  of  these  princi- 
ples considered  as  a  whole.  The  three  prob- 
lems which  commonly  confront  arbitration 
boards  dealing  with  wage  matters  are  the  fol- 
lowing: (I)  What  is  the  test  of  the  adequacy 
of  the  wages  received  by  any  given  grade  of 
employees.'*  (II)  What  principles  should  prop- 
erly govern  the  advance  in  wages.'*  (Ill)  What 
effect  should  the  claim  of  inability  to  pay 
increases  have  upon  wage  advances.'*  The 
succeeding  paragraphs  will  treat  these  ques- 
tions in  the  order  named. 


PRINCIPLES  OF  ARBITRATION        169 

I.  The  Adequacy  of  Wages 

It  is  impossible  to  approach  the  question 
of  adequacy  without  some  conception  of  a 
system  of  wages  which  may  be  used  as  a 
standard  to  which  existing  wages  may  be 
compared.  The  wage  system  in  any  indus- 
try or  in  any  particular  business  unit  may  be 
considered  as  a  structure  with  the  wages  paid 
the  lowest  grade  of  employees  as  the  foun- 
dation, surmounted  by  successively  higher 
levels  representing  the  various  grades  of 
skilled  labor.  The  foundation  wage  is  called 
here  the  primary  wage;  the  increasingly 
higher  levels  are  termed  secondary  wages. 
The  amount  of  differential  between  the  un- 
skilled and  any  grade  of  skilled  labor  is 
simply  the  difference  between  the  secondary 
wage  of  the  latter  and  the  primary  wage.  If 
the  industry  or  business  unit  is  paying  a 
standard  rate  to  each  occupation,  the  primary 
wage  is  the  standard  rate  of  the  lowest  grade 
of  employees,  and  the  standard  rate  of  each 
of  the  skilled  occupations  represents  the  sec- 
ondary wage  of  that  occupation.  If  a  stand- 
ard rate  is  not  in  force,  the  average  wage  of 
each  occupation  must  be  regarded  as  the 
measure  of  the  primary  or  secondary  wage. 
Skilled  grades  of  employment  receive  a  favor- 
able differential  over  unskilled  on  account  of 


170    DETERMINATION  OF  RAILWAY  WAGES 

the  greater  skill,  efficiency,  hazard,  and  re- 
sponsibility, etc.,  involved  in  their  occupa- 
•tions;  and  the  amount  of  this  differential  is 
largely,  though  not  entirely,  a  matter  of  cus- 
tom and  usage.  The  conception  of  a  differen- 
tial wage  is  not  purely  theoretical  nor  fanci- 
ful, for  it  is  used  in  wage  determinations  in 
Australasia,^  and,  as  pointed  out  in  the  chap- 
ter on  increased  productive  efficiency,  all 
employees  keep  a  close  watch  on  their  dif- 
ferential with  a  view  to  the  maintenance  of 
their  position  relative  to  other  employees  in 
the  same  industry. 

The  requisites  for  a  construction  of  a  fair 
differential  wage  system,  then,  are  an  esti- 
mate of  the  amount  of  compensation  due  the 
lowest  grade  of  unskilled  labor  as  a  minimum, 
and  an  estimate  of  the  proper  differential 
above  the  minimum  for  each  grade  of  skilled 
labor  in  the  industry  concerned. 

The  differentials  at  present  existing  be- 
tween the  primary  wage  and  secondary  wages 
are  not  necessarily  the  proper  amounts  com- 
mensurate with  the  greater  skill,  risk,  etc., 
of  skilled  employees.  As  noted  above,  there 
is  a  tendency  for  secondary  wages  to  draw 
away  from  the  primary  wage,  counteracted 
in  some  degree,  it  is  true,  by  the  weaker  tend- 

^  H.  B.  Higgins,  "A  New  Province  for  Law  and  Order,"  Har- 
vard Law  Review,  Vol.  xxix.  No.  1,  pp.  15-17. 


PRINCIPLES  OF  ARBITRATION        171 

ency  of  secondary  wage  advances  to  be  re- 
flected in  primary  wages.  This  widening  of 
differentials  was  ascribed  to  three  causes, 
—  the  greater  relative  increases  in  labor, 
risk,  and  responsibility  of  the  skilled  groups, 
the  influence  of  the  upward  standardization 
movement,  and  the  superior  bargaining  power 
of  the  more  strongly  organized  skilled  em- 
ployees. The  latter  cause  is  undoubtedly  the 
most  influential.  Proper  differentials,  there- 
fore, are  differences  between  wages  which 
have  been  determined  under  precisely  similar 
conditions;  that  is,  the  differences  between 
the  present  secondary  wages  and  a  primary 
wage,  determined  on  the  assumption  that 
the  lowest  grade  of  labor  has  had  the  advan- 
tage of  powerful  organization,  or  the  differ- 
ences between  the  present  primary  wage  and 
secondary  wages  determined  on  the  assump- 
tion that  the  skilled  employees  have  lacked 
the  advantages  of  organization. 

In  the  present  wage  system  of  any  indus- 
try or  business  unit,  the  proper  differential 
may  be  secured  either  by  a  reduction  in  sec- 
ondary wages  by  the  required  amount,  or  by 
an  increase  in  the  primary  wage.  In  the  pre- 
ceding pages,  it  was  held  that  there  were  two 
determining  considerations  in  respect  to  wages, 
the  pa^Tnent  of  a  living  wage  to  the  lowest 
grade  of  employees,  and  the  maintenance  of 


172    DETERMINATION  OF  RAILWAY  WAGES 

the  standard  of  living  of  all  employees.  A 
reduction  in  secondary  wages,  therefore,  must 
be  eliminated,  for  such  action,  apart  from  the 
unrest  inevitably  resulting,  would  reduce  the 
standard  of  living  of  skilled  employees.  The 
latter  alternative,  increasing  the  primary 
wage,  must  be  accepted.  Since  the  lowest 
grades  of  workmen,  in  a  majority  of  cases, 
are  receiving  compensation  below  the  living 
wage  level,  and  since  their  aim  from  the  first 
has  been  to  secure  a  living  wage,  it  is  fair  to 
assume  that  with  a  strong  organization  they 
would  have  obtained  that  amount.  A  system 
of  wages  constructed  with  a  primary  wage 
suflScient  to  secure  a  normal  standard  of  liv- 
ing and  with  secondary  real  wages  kept  at 
their  present  level,  since  the  differentials  over 
the  increased  primary  wage  are  thus  set  at 
their  proper  height,  satisfies  the  requirements 
that  the  lowest  grade  of  labor  receive  a  living 
wage,  and  that  the  standard  of  living  of  all 
grades  of  labor  be  maintained.  A  differential 
system  of  wages  so  constructed  is  advanced 
as  the  standard  to  which  existing  wages  may 
be  compared  as  a  test  of  their  adequacy. 

The  two  fundamental  principles  which  may 
fairly  govern  the  wage  determinations  of 
arbitrators  are  the  grant  of  a  living  wage  to 
unskilled  labor,  and  the  maintenance  of  the 
standard  of  living  of  all  employees.  The  first 


PRINCIPLES  OF  ARBITRATION        173 

of  these  is  the  more  important,  since,  with 
the  upper  grades  of  labor,  there  is  no  ques- 
tion of  their  securing  enough  to  insure  a  de- 
cent standard  of  Hving.  With  this  in  mind, 
therefore,  the  test  of  the  adequacy  of  wages 
paid  to  unskilled  employees  is  as  follows: 
Are  the  lowest  grade  of  employees  receiving 
as  a  minimum  a  living  wage  determined  ac- 
cording to  the  costs  of  food,  rent,  clothing, 
etc.,  at  this  particular  time  and  place?  K 
they  are  not,  the  wage  received  is  inade- 
quate, and  must  be  increased  by  such  an 
amount  as  to  enable  the  unskilled  laborer  to 
secure  a  normal  standard. 

As  to  the  adequacy  of  the  wages  paid  to 
the  various  grades  of  skilled  labor,  the  first 
test  is  the  adequacy  of  the  wages  received 
by  the  unskilled  in  the  same  industry  or  busi- 
ness unit.  If  these  workmen  are  not  receiv- 
ing a  living  wage,  the  test  of  the  adequacy 
of  the  wages  paid  to  skilled  employees  is  as 
follows:  Have  the  wages  of  this  particular 
grade  of  labor  been  reduced  as  a  result  of  an 
increase  in  the  cost  of  living  since  the  last 
wage  adjustment?  If  the  wages  have  been  so 
reduced,  then  they  are  inadequate,  and  must 
be  increased  by  such  an  amount  as  to  enable 
the  skilled  laborers  concerned  to  maintain 
their  former  standard  of  living.  If,  however, 
there  has  been  no  increase  in  living  costs,  and 


174    DETERMINATION  OF  RAILWAY  WAGES 

if  the  unskilled  employees  in  the  same  indus- 
try or  business  unit  are  paid  compensation 
below  the  living  wage,  then  existing  skilled 
wages  must  be  considered  adequate. 

In  arbitration  proceedings,  therefore,  pref- 
erence must  be  given  to  the  demands  of  un- 
skilled employees  receiving  less  than  a  living 
wage,  every  attempt  being  made  to  decrease 
the  widening  differential  between  the  primary 
and  secondary  wages  by  greater  proportion- 
ate increases  to  unskilled  labor.  To  this  grade 
of  labor  every  concession  in  respect  to  wages 
must  be  granted  until  the  living  wage  level 
is  reached,  and  until  that  level  is  reached  no 
advance  should  be  awarded  to  skilled  grades 
except  on  the  basis  of  the  increased  cost  of 
living.  This  advance  is  necessary  to  maintain 
the  standard  of  living.  The  adoption  of  such 
a  policy  by  arbitration  boards  would  work 
no  hardship  to  any  one  grade  of  labor;  un- 
skilled men  would  gradually  approach  a 
normal  standard  of  living,  and  skilled  men 
would  have  their  present  standard  of  living 
protected. 

The  general  application  of  the  principle  of 
standardization  to  the  wage  payments  of  all 
employees  would  greatly  simplify  the  adop- 
tion of  the  differential  system  of  wages  de- 
scribed above.  The  award  of  a  living  wage 
to  the  unskilled  employees  would  establish 


PRINCIPLES  OF  ARBITRATION        175 

a  minimum  and  tend  to  equalize  rates  of  pay 
for  that  grade  in  the  area  involved,  but  it 
would  be  a  difficult  matter  to  determine  the 
amount  of  the  differential  above  this  mini- 
mum for  skilled  occupations  in  which  a  great 
diversity  of  rates  existed  either  within  or  as 
between  business  units.  The  principle  of 
standardization  is  designed  to  abolish  within 
a  given  area  the  multiplicity  of  rates  paid 
for  similar  service  by  the  application  of  one 
standard  rate  for  each  occupation,  minor 
differences  in  the  nature  of  the  work,  due  to 
varying  physical  and  other  conditions,  being 
disregarded.  The  adoption  of  this  principle 
by  arbitration  boards  would  render  the  deter- 
mination of  the  exact  amount  of  the  differen- 
tial between  various  grades  of  labor  simple  in 
comparison  with  a  determination  based  upon 
the  average  wages  of  each  grade.  If  changes 
in  the  nature  of  an  occupation  called  for  an 
increase  or  decrease  in  the  differential  above 
the  minimum  paid  to  unskilled  labor,  such 
changes  could  be  readily  reflected  in  a  stand- 
ard rate,  whereas,  with  the  existence  of  a 
diversity  of  rates,  the  difficulty  would  be 
great.  For  this  reason,  and  also  on  account 
of  the  comparative  ease  of  applying  general 
principles  of  wage  advance,  in  addition  to 
the  other  advantages  mentioned  above,  there 
seems  to  be  sufficient  warrant  for  the  appli- 


176   DETERMINATION  OF  RAILWAY  WAGES 

cation  of  a  standard  rate  in  the  case  of  the 
wages  of  all  employees,  and  over  as  large  an 
area  as  practicable. 

In  applying  this  principle,  however,  arbi- 
tration boards  are  limited  by  the  area  cov- 
ered in  the  wage  dispute  to  be  settled  by  the 
award.  This  area  may  vary  in  size  from  a  sin- 
gle business  unit  to  all  the  units  of  a  given 
industry  throughout  the  country.  The  extent 
of  the  area  depends  mainly  upon  the  degree 
of  centralization  in  the  union  to  which  the 
employees  belong.  Unorganized  or  weakly 
organized  laborers  are  less  likely  to  secure 
standard  rates  over  a  large  area  than  are 
members  of  powerful,  centralized  unions. 
Arbitration  boards,  however,  could  aid  the 
weaker  employees  to  secure  standardization 
if  the  awards  in  disputes  involving  single 
units  where  the  same  grade  of  employees  is 
concerned  were  made  to  conform  with  each 
other  as  closely  as  circumstances  permit,  pro- 
vided, of  course,  that  the  award  used  as  a 
basis  is  not  a  compromise  decision.  District 
standardization  is  the  most  that  can  be  hoped 
for  at  the  present  time,  except  for  such  ex- 
ceptionally powerful  organizations  as  the  rail- 
way brotherhoods,  where  there  is  a  strong 
tendency  toward  national  uniformity. 

The  principles  of  standardization  and  the 
living  wage  must  be  looked  to  in  order  to 


PRINCIPLES  OF  ARBITRATION        177 

secure  the  differential  wage  system  suggested. 
Standardization  establishes  one  standard  rate 
for  each  grade  of  labor  over  a  given  area  and 
temporarily  fixes  the  amount  of  the  differ- 
entials between  grades  of  employment.  The 
living  wage  secures  a  normal  standard  of  liv- 
ing for  the  lowest  grade  of  employees,  and  is 
justified  by  the  fact  that  the  present  differ- 
entials between  unskilled  wages  and  those 
paid  skilled  grades  are  greater  frequently 
than  the  differences  in  skill,  risk,  and  re- 
sponsibility call  for;  that  a  number  of  un- 
skilled workmen  are  receiving  a  wage  insuf- 
ficient to  secure  decent  livelihood,  and  that 
payment  below  the  living  wage  level  consti- 
tutes a  social  evil.  Until  the  lowest  standard 
rate  is  equivalent  to  a  living  wage,  the  rates 
of  other  grades  of  employees  must  be  kept 
at  the  level  required  to  maintain  their  pres- 
ent standard  of  living.  The  absolute  amount 
of  the  standard  rate  for  each  grade  of  em- 
ployees within  the  area  should  vary  only  on 
account  of  differences  in  living  costs  between 
sections  of  the  area,  the  aim  being  equality 
of  real  wages. 

II.  Principles  governing  Wage  Advances 

On  the  assumption  that  the  lowest  grade 
of  labor  in  the  business  unit  or  industry  is  re- 
ceiving a  living  wage,  the  following  princi- 


178    DETERMINATION  OF  RAILWAY  WAGES 

pies  of  wage  advance  may  be  applied  to  all 
grades  of  employment,  skilled  and  unskilled 
alike:  (1)  increased  cost  of  living;  (2)  in- 
creased labor,  risk,  and  responsibility;  (3)  in- 
creased productive  efficiency. 

(1)  The  principle  of  the  increased  cost  of 
living  is  designed  to  maintain  the  standard 
of  living.  Since  the  standard  of  living  de- 
pends in  the  main  upon  the  amount  of  income 
received  and  the  costs  of  commodities,  an 
increase  in  the  latter  without  a  correspond- 
ing increase  in  the  former  is  tantamount  to 
a  reduction  in  wages  and  in  the  standard  of 
living.  The  maintenance  of  the  standard  of 
living  is  of  utmost  importance  to  society,  and 
for  this  reason  it  is  imperative  that  wages 
should  advance  in  the  same  proportion  as  liv- 
ing costs  increase.  By  the  cost  of  living  is 
meant  not  only  the  cost  of  food,  but  also  the 
costs  of  rents,  clothing,  fuel  and  light,  and 
sundries. 

The  increased  cost  of  living  principle  of 
wage  advance  is  applicable  to  all  employees 
of  every  grade.  The  actual  advance  in  living 
costs,  however,  may  vary  for  the  different 
grades  of  employment  on  account  of  the  un- 
equal percentages  of  total  income  spent  for 
food,  clothing,  etc.,  by  those  receiving  dif- 
ferent amounts  of  income.  This  principle  is 
applicable  also  in  either  single  or  concerted 


PRINCIPLES  OF  ARBITRATION        179 

movements.  In  the  latter,  by  reason  of  the 
extensive  territory  involved  and  of  fluctua- 
tions in  the  cost  of  living  for  different  sec- 
tions of  the  area,  arbitrators  sometimes  hesi- 
tate to  apply  a  single  percentage  of  increase 
to  wages.  There  seems  to  be  no  real  injustice 
done,  however,  if  the  average  increase  in  the 
cost  of  living  for  the  area  concerned  be  taken 
as  the  measure  of  the  advance  in  wages.  If 
possible,  a  refinement  might  be  made  by  a 
subdivision  of  the  area  and  a  separate  de- 
termination of  the  different  increases  in  liv- 
ing costs  for  each  of  these  subdivisions. 

The  claim  of  employers  that  if  wages  are 
advanced  in  the  same  proportion  as  the  in- 
crease in  the  cost  of  living  they  should  like- 
wise be  decreased  in  the  same  proportion  as 
living  costs  decline  should  not  be  allowed. 
In  the  past,  wage  reductions  during  long  con- 
tinued periods  of  declining  prices  have  been 
vigorously  opposed  by  employees,  and  the 
result  has  been  a  decrease  in  wages  by  a  some- 
what smaller  ratio  than  the  decrease  in  prices. 
Arbitration  boards  should  endeavor  to  raise 
the  standard  of  living  of  employees  whenever 
possible,  and  this  result  can  be  obtained  dur- 
ing periods  of  declining  prices  by  a  refusal  to 
allow  decreases  in  wages  equal  to  the  decline 
in  prices,  without  the  likelihood  of  friction 
between  employers  and  employees,  and  with- 


180   DETERMINATION  OF  RAILWAY  WAGES 

out  going  counter  to  the  normal  trend  of 
wages  during  long  periods  of  declining  prices. 

(2)  Since  the  labor,  risk,  and  responsibility 
involved  in  any  occupation  are  the  usual 
determinants  of  the  amount  of  wages  paid, 
any  increase  in  these  elements  demands  a 
corresponding  increase  in  ihe  wage.  The 
amount  of  wage  advance  due  to  increases  in 
labor,  risk,  and  responsibility  must  be  esti- 
mated arbitrarily,  for  there  is  no  exact  unit 
for  the  measurement  of  these  factors.  In- 
creased labor,  risk,  or  responsibility  as  a  basis 
of  wage  advance  is  applicable  to  all  employees, 
both  skilled  and  unskilled.  It  may  be  argued 
that  as  the  living  wage  has  been  suggested 
as  the  basis  of  wage  payment  to  unskilled 
labor,  these  factors  of  labor,  risk,  and  re- 
sponsibility do  not  properly  enter  into  the 
determination  of  their  wage.  The  living 
wage,  however,  is  the  amount  due  for  the 
minimum  of  skill,  labor,  risk,  and  responsi- 
bility, and  any  increase  in  these  must  be 
added  to  the  living  wage  compensation. 

Since  the  degree  of  skill,  labor,  risk,  and 
responsibility  usually  influences  the  height 
of  the  differential  paid  skilled  labor  above 
the  wage  of  the  unskilled,  any  increase  in 
these  factors  for  a  given  grade  of  skilled  labor 
operates  to  change  its  existing  differential. 
As  changes  in  labor,  risk,  and  responsibility 


PRINCIPLES  OF  ARBITRATION        181 

are  most  likely  to  occur  in  skilled  groups  in 
which  modern  mechanical  appliances  pro- 
duce the  most  noticeable  effects,  the  result  of 
the  application  of  this  principle  will  be  a 
widening  of  the  differential  of  the  skilled 
grades  over  the  unskilled.  There  are  several 
influences,  however,  which  may  tend  to  keep 
the  differential  amounts  constant.  Thus,  the 
introduction  of  various  labor-saving  and 
safety  devices  in  one  set  of  operations  con- 
nected with  a  skilled  occupation  may  serve 
to  lessen  or  to  offset  increases  in  labor  or  risk 
in  another  set  of  operations.  A  more  definite 
check  upon  an  increase  in  the  differentials 
favoring  skilled  labor  is  that  wage  advances 
to  the  lower  paid  employees  based  on  the 
increased  cost  of  living  are  likely  to  be  greater 
than  similar  advances  to  men  high  up  in  the 
scale  of  compensation.  This  happens  on  ac- 
count of  the  fact  that  food,  the  commodity 
ordinarily  showing  the  greatest  advance  in 
price,  constitutes  a  larger  item  of  expenditure 
for  small  incomes  than  for  large  ones.  Thus, 
a  strict  application  of  the  principle  of  the  in- 
creased cost  of  living  to  unskilled  employees 
and  a  recognition  of  reductions  or  offsets  in 
increased  labor,  risk,  and  responsibility  of 
skilled  employees  by  the  adoption  of  labor- 
saving  and  safety  devices  may  serve  to  keep 
the    differentials    between    skilled    and    un- 


182    DETERMINATION  OF  RAILWAY  WAGES 

skilled  occupations  constant.  There  is  no  rea- 
son, however,  for  maintaining  differentials  if 
changes  in  the  nature  of  an  occupation  call 
for  an  increase  or  decrease  in  the  amount  of 
compensation  above  the  living  wage.  Ad- 
vances based  on  the  increased  labor,  risk,  and 
responsibility  principle  tend  to  keep  the  dif- 
ferentials between  various  grades  of  labor  at 
their  proper  level. 

(3)  In  the  chapter  on  increased  productive 
efficiency  it  was  held  that  participation  in 
revenue  gains  according  to  specific  contribu- 
tion to  output  was  not  a  valid  principle  of 
wage  advance,  but  that  wage  advances  might 
with  propriety  be  made  during  periods  in 
which  the  particular  business  unit  or  indus- 
try was  enjoying  increasing  revenues  from 
year  to  year,  due  to  the  introduction  of  im- 
proved methods  of  production.  Wage  ad- 
vances on  this  principle  are  designed  to  give 
the  employees  some  share  in  industrial  prog- 
ress and  are  based  on  social  expediency.  It 
is  natural  for  employees  to  consider  them- 
selves entitled  to  an  increase  in  wages  at 
those  times  when  the  industry  employing 
them  is  reaping  large  profits,  especially  when 
the  employees  are  operating  the  machines 
which  make  increased  profits  possible.  At 
such  periods  wage  advances  can  be  made 
without  direct  injury  to  the  industry  and 


PRINCIPLES  OF  ARBITRATION        183 

without  the  necessity  of  passing  on  the  ad- 
vance to  the  pubHc  in  the  form  of  higher 
prices.  Society  will  be  thus  benefited  by  the 
removal  of  any  tendency  on  the  part  of  the 
employees  to  strike  and  by  the  improved 
standard  of  living  resulting  from  an  increase 
in  wages.  In  periods  of  intense  business  ac- 
tivity and  increased  demand  for  the  commod- 
ity produced,  when  profits  increase  by  leaps 
and  bounds,  wage  advances  may  be  granted 
on  the  same  basis  of  social  expediency.  A 
concrete  illustration  of  the  application  of 
this  principle  is  given  by  the  recent  wage 
increases  granted  by  munition  manufactur- 
ers as  a  result  of  the  immense  profits  earned 
by  trade  with  belligerents. 

Wage  advances  based  on  the  principle  of 
increased  productive  eflSciency  are  applicable 
to  all  employees  within  the  unit  or  industry, 
and  the  division  of  the  total  amount  to  be 
apportioned  should  be  equal.  The  determi- 
nation of  the  proper  amount  to  be  thus  dis- 
tributed must  be,  of  course,  on  an  arbitrary 
basis.  Claims  of  employers  that  if  the  men 
share  in  industrial  progress  they  should  also 
bear  the  burden  of  any  retrograde  movement 
in  industry  should  be  disallowed,  for  a  wage 
advance  on  the  principle  of  increased  pro- 
ductive efficiency  is  to  be  regarded  as  per- 
manent, since  the  proposed  reduction  would 


184    DETERMINATION  OF  RAILWAY  WAGES 

affect  the  employees'  standard  of  living  for 
the  worse. 

The  question  may  arise  as  to  whether  the 
three  bases  of  wage  advance  outlined  above 
are  cumulative  in  their  application.  Should 
the  percentage  or  amount  of  increase  deter- 
mined as  correct  for  each  of  the  above  be 
added  and' applied  to  the  existing  wage,  or 
should  the  largest  only  be  applied,  the  others 
being  included  in  that  one  percentage  or 
amount?  This  question  may  be  answered  by 
considering  the  ultimate  basis  for  each  spe- 
cific increase.  A  wage  advance  on  the  principle 
of  the  increased  cost  of  living  serves  merely 
to  maintain  the  standard  of  living,  and  wages 
should  be  advanced  by  the  amount  of  the 
increase  in  living  costs  as  a  minimum.  If  ap- 
phed  to  all  wages  alike,  the  relative  standard 
of  living  of  the  various  grades  would  be  un- 
changed. It  may  happen,  however,  that  a 
change  is  warranted  in  some  existing  dif- 
ferential on  account  of  a  greater  or  less  de- 
gree of  labor,  risk,  or  responsibility  involved 
in  a  particular  occupation,  and  advances 
based  on  an  increase  in  labor,  risk,  or  respon- 
sibility serve  to  bring  about  this  change  and 
to  keep  differentials  at  their  proper  level.  The 
latter  advance,  therefore,  would  not  be  in- 
cluded in  the  advance  on  the  basis  of  the  in- 
creased cost  of  living.  A  wage  advance  on  the 


PRINCIPLES  OF  ARBITRATION        185 

principle  of  increased  productive  efficiency- 
affords  an  opportunity  to  employees  to  par- 
ticipate in  industrial  progress;  that  is,  their 
standard  of  living  is  to  be  raised  by  an  ad- 
vance in  addition  to  what  the  mere  mainte- 
nance of  the  standard  of  living  calls  for.  Such 
a  wage  advance,  therefore,  is  to  be  entirely 
separated  from  the  other  two  bases.  The 
three  wage  principles,  increased  cost  of  liv- 
ing, increased  labor,  risk,  and  responsibility, 
and  increased  productive  efficiency  are  con- 
sequently separate  and  distinct,  and  all  three 
may  be  fairly  applied  in  a  single  arbitration 
award,  the  total  amount  of  increase  to  be  finally 
added  to  the  existing  wage  being  determined 
by  the  sum  of  the  increases  deemed  proper. 

The  strict  application  of  the  above  men- 
tioned bases  of  wage  advance  will  operate 
not  only  to  secure  a  living  wage  for  the  low- 
est grade  of  employees  and  the  maintenance 
of  the  standard  of  living,  but  also  an  advance 
in  the  living  standards  of  all  grades  of  labor. 
The  effect  of  the  general  progress  of  civiliza- 
tion and  of  the  development  of  ambition  and 
education  among  the  laboring  class  upon  the 
standard  of  living  has  already  been  referred 
to.  In  addition,  however,  there  are  two  more 
tangible  factors  which  may  serve  to  better  the 
condition  of  labor.  An  increase  in  wages 
based  on  the  principle  of  increased  productive 


186   DETERMINATION  OF  RAILWAY  WAGES 

efficiency  represents  an  advance  in  excess  of 
that  needed  merely  to  maintain  the  standard 
of  living.  And  further,  the  refusal  of  arbitra- 
tion boards  to  permit  a  decrease  in  wages 
corresponding  to  the  decrease  in  living  costs 
during  long  time  periods  of  declining  prices 
will  also  advance  the  standard  and  enable 
employees  to  secure  a  higher  scale  of  comfort. 
On  the  assumption  that  the  lowest  grade  of 
employees  in  the  industry  concerned  are  re- 
ceiving a  living  wage,  the  test  of  the  adequacy 
of  the  wages  paid  any  grade  of  employment 
is  as  follows:  Have  living  costs  increased 
since  the  last  wage  adjustment  affecting  the 
employees  concerned?  Have  there  been  any 
increases  or  decreases  in  labor,  risk,  and  re- 
sponsibility in  this  occupation  since  the  last 
advance  in  wages.'*  Is  the  industry  or  busi- 
ness unit  in  which  the  men  are  employed 
enjoying  increasing  profits  as  a  result  of  im- 
proved methods  of  production  or  of  increased 
demand.'*  If  these  three  questions  taken  to- 
gether can  be  answered  in  the  affirmative, 
then  the  wages  received  are  inadequate  and 
should  be  advanced. 

III.  Effect  upon  Wage  Advances  of  Inability 

TO  PAY 

It  is  ordinarily  difficult  for  a  board  to  ob- 
tain any  facts  upon  which  a  conclusion  can  be 


PRINCIPLES  OF  ARBITRATION        187 

reached  regarding  this  question.  Just  as  em- 
ployees in  making  wage  demands  usually 
represent  their  condition  as  far  worse  than 
actual  investigation  demonstrates,  so  em- 
ployers, desiring  high  profits  and  recognizing 
that  wages  and  profits  come  out  of  earnings, 
ordinarily  claim  that  an  increase  in  labor 
costs  will  cut  down  profits  to  a  point  which 
they  consider  an  inadequate  return  on  the 
investment,  or  in  some  cases  will  entirely  de- 
stroy the  possibility  of  making  any  profit  at 
all.  Statistical  exhibits  showing  for  an  indi- 
vidual business  the  actual  amount  of  profit 
are  usually  misleading  and  practically  use- 
less, for  the  variations  and  intricacies  of  dif- 
ferent methods  of  accounting  enable  em- 
ployers to  show  that  the  particular  business 
is  earning  a  minimum  amount.  The  employ- 
ees, on  the  other  hand,  usually  present  equally 
convincing  proof  that  profits  are  ample  and 
that  wage  advances  can  be  made  without 
injury  to  the  owners  or  to  the  public.  Arbi- 
trators have  no  way  of  discovering  which  of 
these  two  statements  is  correct;  nor  have  they 
the  time  or  the  ability  to  investigate  the  true 
conditions  and  arrive  at  a  conclusion  based 
on  the  actual  facts. 

Even  if  arbitrators  were  able  to  ascertain 
the  actual  profits  of  an  industry  or  individ- 
ual business,  when  the  question  arises  as  to 


188    DETERMINATION  OF  RAILWAY  WAGES 

whether  these  profits  are  large  enough  to 
permit  a  wage  advance,  a  further  difficulty 
appears,  for  there  is  no  generally  accepted 
opinion  as  to  what  constitutes  a  fair  rate  of 
profit,  any  more  than  there  is  a  universal 
opinion  as  to  what  constitutes  a  fair  wage. 
Some  investigators  hold  that  weight  should 
be  given  to  the  profitableness  or  unprofit- 
ableness of  a  business  in  determining  wage 
advances;  others  maintain  that  this  position  is 
untenable.  The  whole  discussion  as  to  whether 
the  inability  of  the  particular  business  to  pay 
should  affect  wage  advances  is  marked  by 
bias,  inaccurate  reasoning,  and  a  lack  of  any 
definite  theory  of  fair  wages  and  profits. 

On  the  basis  of  the  conclusions  reached  in 
the  preceding  pages,  it  must  be  granted  that 
the  payment  of  a  living  wage  to  the  low- 
est grade  of  employees,  and  the  maintenance 
of  the  standard  of  living  of  all  employees, 
skilled  and  unskilled,  by  an  increase  in  wages 
proportionate  to  the  increase  in  the  cost  of 
living,  must  be  regardless  of  the  financial 
condition  of  any  industry  or  unit  of  it.  The 
payment  of  a  living  wage  and  the  mainte- 
nance of  the  standard  of  living  are  essential 
from  a  social  point  of  view;  and  there  is  no 
reason  why  an  unskilled  laborer  should  be- 
come an  unfit  member  of  society  by  receiving 
a  wage  lower  than  a  decent,  normal  stand- 


PRINCIPLES  OF  ARBITRATION        189 

ard,  or  why  a  skilled  laborer  should  take  a 
lower  position  in  the  social  scale,  because  the 
business  in  which  he  is  employed  is  unfavor- 
ably situated  in  regard  to  transportation  fa- 
cilities; is  failing  on  account  of  a  fall  in  de- 
mand for  its  products ;  or  is  in  financial  straits 
as  a  result  of  mismanagement  or  any  other 
similar  misfortune. 

The  effect  of  increases  based  on  the  living 
wage  and  on  the  increased  cost  of  living  will 
be,  of  course,  an  advance  in  operating  ex- 
penses, and  a  consequent  reduction  in  the 
amount  available  for  dividends,  surplus,  etc. 
In  some  cases  these  wage  advances  will  be 
offset  by  the  increased  efficiency  of  labor, 
the  introduction  of  improved  machinery, 
more  efficient  management,  and  a  larger 
amount  of  product;  in  other  cases,  however, 
these  counter  influences  may  not  operate, 
and  profits  will  be  reduced  or  entirely  ab- 
sorbed by  the  wage  advances.  Two  courses 
of  action  are  possible  for  the  latter  class  of 
establishments  —  retirement  from  business 
or  an  increase  in  the  price  of  the  product. 
The  first  will  affect  only  a  few  persons,  the 
latter  affects  all  who  purchase  the  particular 
commodities  produced.  Either  of  these  two 
results,  however,  it  may  be  held,  is  of  less 
disadvantage  to  society  than  the  underpay- 
ment of  laborers.  It  has  been  asserted  that  if 


190   DETERMINATION  OF  RAILWAY  WAGES 

prices  increase  as  a  result  of  wage  advances, 
the  laborer  is  just  as  badly  off  as  he  was  be- 
fore the  increase,  and  therefore  it  is  useless 
to  advance  wages  on  the  basis  of  the  increased 
cost  of  living.  It  has  been  pointed  out,  how- 
ever, that  although  the  wage-earning  class 
numbers  about  four  fifths  of  the  total  popu- 
lation, yet  it  consumes  only  about  two  fifths 
of  the  annual  aggregate  of  products  and  serv- 
ices, the  rest  being  enjoyed  by  the  employ- 
ing and  propertied  classes.  If  the  rise  in 
wages  were  reflected  in  all  prices  by  an  iden- 
tical rise,  the  wage  earning  class  would  bear 
but  two  fifths  of  the  additional  price.  Even 
this  burden  would  not  be  borne  if  the  rise  in 
prices  occurred  in  those  commodities  which 
do  not  constitute  items  of  expenditure  in 
wage  earners'  families.^ 

In  the  application  of  the  principles  of  the 
living  wage  and  of  increased  cost  of  living, 
then,  the  inability  of  the  business  to  pay 
should  not  be  allowed  to  affect  the  increase. 
Wage  advances  based  on  increased  labor, 
risk,  and  responsibility  are  likely  to  total  a 
small  amount  and  the  effect  upon  profits  will 
be  almost  negligible.  As  to  the  application 
of  standardization,  precedent  in  arbitration 
proceedings  in  the  United  States  has  estab- 
lished the  principle  that  the  inability  of  par- 

*  Webb,  Indmtrial  Democracy  (1902  ed.),  p-  781  (note). 


PRINCIPLES  OF  ARBITRATION        191 

ticular  units  to  pay  the  standard  rate  should 
not  influence  the  uniform  payment  of  that 
amount  throughout  the  section  or  district. 
There  appears  to  be  no  reason  why  this  prece- 
dent should  be  regarded  as  unfair,  unless  it 
could  be  shown  that  the  standard  was  not 
at  the  proper  differential  level  above  the 
compensation  of  the  lowest  grade  of  em- 
ployees. The  claim  for  wage  advances  based 
on  the  principle  of  increased  productive  effi- 
ciency can  be  brought  forward  only  where 
the  industry  concerned  is  earning  increased 
profits  from  improved  methods  of  produc- 
tion. Inability  to  pay,  therefore,  has  no 
bearing  on  the  possibility  of  applying  this 
principle,  but  only  upon  the  part  of  the  in- 
creased profits  which  is  to  be  granted  to  the 
employees  in  the  form  of  wage  advances. 

As  a  general  proposition,  then,  it  may  be 
stated  that  the  inability  of  the  industry  or 
units  to  pay  should  not  be  permitted  to 
affect  wage  advances.  It  is  necessary,  how- 
ever, to  quaUfy  this  statement  somewhat 
when  this  inability  arises  from  general  busi- 
ness depression,  and  not  from  any  chronic 
condition  of  the  industry  concerned.  Periods 
of  business  depression  are  usually  brief,  and 
since,  at  such  times,  the  margin  of  profit 
may  be  temporarily  so  narrow  that  an  ad- 
vance in  wages  will  require  retirement  from 


192   DETERMINATION  OF  RAILWAY  WAGES 

business  or  an  advance  in  prices,  wage  in- 
creases should  be  denied.  Demands  based 
upon  increased  productive  efficiency  and  in- 
creased cost  of  living  are  not  likely  to  be 
presented  during  periods  of  depression,  but 
if  employees  do  make  such  demands  they 
should  be  refused.  When  a  wage  advance  is 
awarded  on  the  basis  of  the  increased  cost 
of  living  after  a  period  of  depression,  care 
should  be  taken  to  measure  the  increase  in 
living  costs,  not  from  the  year  of  lowest  price 
depression,  but  from  the  year  of  the  last 
wage  adjustment. 

One  exception  should  be  made  to  the  gen- 
eral statement  that  no  wage  advances  should 
be  granted  during  years  of  business  depres- 
sion. When  demands  are  made  upon  the 
living  wage  principle,  arbitration  boards 
should  award  the  full  amount  of  wage  ad- 
vance necessary  to  secure  the  normal  stand- 
ard of  living  regardless  of  general  business 
conditions.  The  payment  of  a  living  wage 
is  of  the  utmost  importance  and  should  re- 
ceive first  consideration.  Employees,  how- 
ever, in  planning  requests  for  wage  advance 
on  any  of  the  above  principles  should  en- 
deavor to  select  the  most  opportune  time 
for  presentation,  avoiding  periods  of  depres- 
sion and  delaying  requests,  as  the  conduc- 
tors and  trainmen  did  in  1908. 


PRINCIPLES  OF  ARBITRATION        193 

Finally,  arbitration  boards  should  refuse 
reductions  in  wages  during  periods  of  de- 
pression, because  a  decrease  in  wages  will 
hinder  readjustment  and  the  return  of  busi- 
ness prosperity  by  checking  the  incentive 
of  employers  to  introduce  economies  in  costs 
other  than  labor,  and  by  decreasing  the  effi- 
ciency of  employees. 

The  above  principles  for  the  government 
of  arbitration  awards  concerning  wages  are 
suggested  as  a  substitute  for  the  usual  com- 
promise decisions.  Arbitration,  as  it  is  now 
practiced,  is  merely  mediation  conducted 
under  the  guise  of  judicial  procedure.  On 
account  of  its  essentially  judicial  nature,  an 
arbitration  award  is  expected  by  the  em- 
ployers and  employees  to  approach  some 
standard  of  fairness  and  reasonableness. 
Compromise  decisions  fail  to  meet  this  ex- 
pectation, and  the  attempt  has  been  made 
in  this  chapter,  to  suggest  some  fair  and  rea- 
sonable bases  of  wage  advance,  in  the  belief 
that  their  application  will  make  the  boards' 
findings  more  in  accord  with  the  underlying 
principle  of  arbitration. 


INDEX 


Arbitration  boards,  attitude 
toward  system  standardiza- 
tion, 8-12;  attitude  toward 
district  standardization,  26-31 ; 
attitude  toward  national  stand- 
ardization, 37-39;  refuse  to 
standardize  rates  East  and 
West,  51-53;  uphold  principle 
of  living  wage,  62-67;  prob- 
lems confronting,  71-76;  posi- 
tion re  increased  cost  of  living 
plea,  90-95;  re  increased  pro- 
ductive efficiency,  142-143; 
three  problems  of,  168. 

Australasia,  72,  170. 

Baltimore  and  Ohio  R.R.,  30,  93, 
109. 

"Big  Four"  Arbitration,  66. 

Brotherhood  of  Locomotive  En- 
gineers, 15,  130. 

Brotherhood  of  Railroad  Train- 
men. 14,  120. 

Brown,  W.  C,  88. 

Bureau  of  Railway  Economics, 
101. 

Business  depression,  effect  on 
wages,  66-67,  73-76,  126-128, 
191. 

Canadian  Department  of  Labour, 

105. 
Canadian  Northern  R.R.,  58,  63, 

64,  66,  94. 
Canadian   Pacific   Railway,    28, 

58,  63,  66,  113,  121. 
Carter,  W.  S.,  85. 
Chapin,  69,  70,  83,  99. 


Chicago,  Burlington  &  Quincy 
R.R.,  84. 

Chicago  Terminal,  161. 

Clark-Morrissey  Award,  27,  86, 
88,  93. 

Classification  of  service,  3,  4. 

Collective  bargaining,  12-13; 
purpose  of,  14. 

Compensation,  danger  of  uni- 
form, 40-41. 

Concerted  movement,  in  West, 
14-18;  purpose  of,  43-44. 

Conference  Committee  of  Gen- 
eral Managers,  15. 

Cost  of  living,  reflected  in  stand- 
ard rate,  48—49;  as  basis  of 
wage  advance,  77-86,  178; 
railways'  attitude  on,  86-90; 
attitude  of  boards,  90-95;  ef- 
fect of  decreasing,  113-118, 
179;  effect  of,  plea  on  public, 
121-122;  underlying  principle, 
118-119;  principle  of,  178. 

Denver  and  Rio  Grande  R.R., 
93,  129. 

Devine,  E.  T.,  69. 

Differential  wage,  169.^.;  cause 
of  widening  of,  171;  influences 
that  keep,  constant,  181-182. 

District  standardization,  mean- 
ing of,  12;  desire  for,  12;  move- 
ment for,  14;  recognized  dis- 
tricts, 17  n.;  employees'  con- 
tentions, 19-23;  railways'  op- 
position to,  23-26;  boards'  atti- 
tude toward,  26-31;  advan- 
tages to  all  parties,  46-49. 


196 


INDEX 


Doctrine  of  vested  interests,  80- 
81. 

Eastern  Association  of  General 
Committees,  16. 

Eastern  Conductors  and  Train- 
men, 12,  27,  31,  37,  50,  51,  52, 
86,  89,  136,  142,  146.  162. 

Eastern  Engineers,  4,  9,  10,  26, 
27,  30,  31,  33,  37,  87,  91,  108, 
110,  161. 

Eastern  Firemen,  12,  20,  27,  31, 
34,  37,  85,  136,  147. 

Economists,  agree  as  to  com- 
pensation, 67-70;  urge  main- 
taining standard  of  living, 
95-97. 

"Elusive  phrase,"  135. 

Employees,  form  of  standardiza- 
tion proposed  by,  3-4;  claims 
for  standard  rate,  5-6;  seek  to 
extend  standard  rate,  13-14; 
benefit  by  concerted  move- 
ment, 18;  chief  contentions  of, 
19-23;  claim  for  national 
standardization,  32-34;  inter- 
pretation of  living  wage,  56-60; 
cost  of  living  as  basis  of  wage 
advance,  77-86;  claims  re  pro- 
ductive efficiency,  132-138; 
relation  to  increased  output, 
146  #. 

"Endless  chain,"  36-37,  51-52. 

Erdman  and  Newlands  Acts,  60, 
77,  93,  129. 

Erie  R.R.,  30. 

Federal  Hour  Law,  18. 
Frisco  R.R.,  15. 
Full  Crew  Laws,  161. 

Garretson,  52. 

Georgia  and  Florida  Arbitration, 

25,  28,  30,  163. 
Georgia  Railway  Strike,  85. 


Grand  Trunk  Pacific  R.R.,  58, 

63,  66. 
Grand  Trunk  R.R.,  28,  58,  64. 
Greenwich  House,  99. 

Industrial  Disputes  Investiga- 
tion Act,  60,  77,  94. 

Labor,  as  a  determining  factor, 
22,  134,  157,  180. 

Lee,  Elisha,  87. 

Lee,  W.  G.,  120. 

Legislative  Council  of  New  Zea- 
land, 72. 

Living  standards,  strata  of,  55- 
56;  defined,  81-82;  effect  of 
class  of  society  upon,  82,  119- 
120;  income  chief  determinant 
of,  83-86;  maintenance  of, 
urged  by  economists,  95-97; 
not  stationary,  118-121,  188. 

Living  wage,  meaning  of,  55 ;  em- 
ployees' interpretation  of.  56- 
60;  objection  of  railways  to, 
60-62;  boards  in  favor  of,  62- 
66;  possibility  of  determining 
amount  of,  69-71;  essential, 
188/. 

McCrea,  President,  124. 
Massachusetts  Commission,  79. 
Massachusetts    Commission    on 

Cost  of  Living,  121. 
Minimum  of  subsistence,  55. 
Missouri,  Kan.,  &  Tex.  R.R.,  15. 
Missouri  Pacific  R.R.,  15,  63,  93. 
Mitchell,  W.  C,  75. 
More,  69,  70,  83. 
Morrissey.  P.  H.,  110. 

National  standardization,  em- 
ployees' claim  for,  32-34;  rail- 
ways' opposition  to,  34-37; 
attitude  of  boards  toward,  37- 
39;  advantages  of,  53. 


INDEX 


197 


Nearing,  Scott,  69. 

New  Haven  R.R.,  30. 

New  York  Central  R.R.,  27,  30, 

93. 
New  York,  Chicago  &  St.  Louis 

R.R.    (Nickel  Plate),  57,  61, 

62,  63,  104. 
Normal  standard  of  living,  55; 

essentials  constituting,  68-69. 

Order  of  Railway  Conductors,  14. 

Organization,  beneficial  to  un- 
organized, 165-167. 

Output,  relation  to  traffic  and 
capacity,  139-141;  result  of 
joint^activity,  145^. 

Pennsylvania  R.R.,  30. 

Perhara,  104. 

Pittsburgh  Terminal  R.R.,  63. 

Productive  efficiency,  principle 
of  increased,  130,  182-184: 
employees  claims  re,  132-138; 
meaning  of,  137;  attitude  of 
railways,  138-142;  position  of 
boards,  142-143;  validity  of 
principle  of,  143-157. 

Railway  Post-Office  Service,  39. 

Railways,  reply  to  demands  for 
standardization,  6-8;  benefit 
by  concerted  movements,  18; 
ability  to  pay  standard  rate, 
22,  66,  125,  187  #;  opposition 
to  district  standardization,  23- 
26,  45;  opposed  to  national 
standardization,  34-37;  ob- 
jection to  saving  clause,  41- 
42;  objection  to  living  wage 
plea,  60-62;  inability  to  pay 
living  wage,  66;  attitude  to- 
ward increased  cost  of  living 
plea,  86-90,  179;  claim  that 
limit  is  reached,  123-125;  atti- 
tude toward  principle  of  in- 


creased productive  efficiency, 

138-142. 
Reading  R.R.,  30. 
Responsibility,  22,  134,  157,  180. 
Revenues,    result    of    increased 

productive  capacity,  131-132; 

principle  of  participation  in, 

133. 
Risk,  22,  134,  157,  18a 
Rubinow,  Dr.  I.  M.,  79. 

St.  Louis  South  Western  R.R.,  15. 

Saving  clause,  5;  aim  of,  7;  con- 
demned, 7-8;  privileges  of, 
abused,  11;  attempt  to  define, 
11;  railways'  objection  to,  41- 
42. 

Select  Senate  Committee  on 
Wages  and  Prices,  122. 

Senate  Committee  of  1910,  79. 

Southern  R.R.,  27,  29,  64,  70,  93, 
103. 

Standard  rate,  cause  of  demand 
for,  2;  uniform  application  of, 
3;  employees'  claims,  5-6;  rail- 
ways' definition  of,  6-8;  form 
of,  10-12;  employees  seek  to 
extend,  13-14;  disadvantages 
of  lack  of,  19-20;  ability  of 
roads  to  pay,  22,  181  ff. ;  dan- 
ger in  uniform,  40-41;  inevi- 
table, 42-43;  cost  of  living  re- 
flected in,  48-49. 

Standardization,  meaning  of,  1; 
object  of,  1;  system,  1-12; 
district,  12-31;  national,  31- 
39;  chief  objection  to,  40; 
validity  of  principle  of,  39  jf.; 
effect  of  inability  of  roads  to 
pay  upon,  72-73. 

Statistics,  importance  of,  97-113. 

Stone,  W.  S.,  130,  132. 

Streightoff,  F.  H.,  69. 

System  standardization,  mean- 
ing of,   1;  form  proposed  by 


198 


INDEX 


employees,  3-4;  railways'  atti- 
tude toward,  6-8;  attitude  of 
boards,  8-12. 

Traffic  conditions,  21. 

U.S.  Bureau  of  Labor,  79. 
U.S.  Bureau  of  Labor  Statistics, 
69,  78,  101. 

Wabash  R.R.,  63. 

Wage  bargaining,  influence  of 
form  on  wages,  43. 

Wages,  cost  of  living  as  basis  of 
advance,  77-86;  chief  deter- 
minants, 157-167,  180;  ade- 
quacy of,  169  Jf. ;  primary,  169; 
secondary,  169;  test  of  ade- 
quacy of,  173-174,  186;  prin- 
ciples governing  advances  in, 
177  f. ;  ultimate  basis  for  ad- 


vance, 184;  effect  of  inability 
to  pay  on  advances  in,  186  Jf.; 
result  of  increases  in,  189;  sta- 
tistics showing  increase  in, 
106/. 

Wame,  Dr.  F.  J.,  47. 

Webb,  Sidney  and  Beatrice,  49, 
80. 

West  Side  Belt  R.R.,  6a 

Western  Advance  Rate  Case,  124. 

Western  Association  of  General 
Committees  of  the  Order  of 
Railway  Conductors  and  the 
Brotherhood  of  Railroad 
Trainmen,  14. 

Western  Conductors  and  Train- 
men, 16,  38. 

Western  Engineers  and  Firemen, 
27,  87,  124,  132,  135,  136,  14a 

Wheeling  and  Lake  Erie  Arbi- 
tration, 58,  62,  63. 


CAMBRIDGE  .  MASSACHUSETTS 
U    .   S    .   A 


Pri|e  Economic  ©egaps 


THE    CAUSE    AND    EXTENT    OF   THE    RECENT   INDUS- 
TRIAL PROGRESS  OF  GERMANY.    By  Earl  D.  Howard. 

THE    CAUSES  OF  THE  PANIC  OF   1893.     By  William  J. 
Lauck. 

INDUSTRIAL    EDUCATION.      By  Harlow  Stafford  Person, 
Ph.D. 

FEDERAL   REGULATION    OF    RAILWAY   RATES.      By   Al- 
bert N.  Merritt,  Ph.D. 

SHIP  SUBSIDIES.  An  Economic  Study  of  the  Policy  of  Sub- 
sidizing Merchant  Marines.     By  Walter  T.  Dunmore. 

SOCIALISM  :  A  CRITICAL  ANALYSIS.     By  O.  D.  Skelton. 

INDUSTRIAL  ACCIDENTS  AND  THE!  R  COMPENSATION. 
By  Gilbert  L.  Campbell,  B.  S. 

THE  STANDARD  OF  LIVING  AMONG  THE  INDUSTRIAL 
PEOPLE  OF    AMERICA.      By    Frank  H.   Streightoff. 

THE     NAVIGABLE    RHINE.     By  Edwin  J.  Clapp. 

HISTORY  AND  ORGANIZATION  OF  CRIMINAL  STATIS- 
TICS IN  THE  UNITED  STATES.  By  Louis  Newton 
Robinson. 

SOCIAL  VALUE.     By  B.  M.  Anderson,  Jr. 

FREIGHT  CLASSIFICATION.     By  J.  F.  Strombeck. 

WATERVi'AYS  VERSUS  RAILVi'AYS.  By  Harold  Glenn 
Moulton. 

THE  VALUE  OF  ORGANIZED  SPECULATION.  By  Harri- 
son H.  Brace. 

INDUSTRIAL  EDUCATION:  ITS  PROBLEMS,  METHODS 
AND  DANGERS.     By  Albert  H.  Leake. 

THE  UNITED  STATES  INTERNAL  TAX  HISTORY  FROM 
I  86  I   TO  I  87  I .      By  Harry  Edwin  Smith. 

WELFARE  AS  AN  ECONOMIC  QUANTITY.  By  G.  P.  Wat- 
kins. 

CONCILIATION  AND  ARBITRATION  IN  THE  COAL  IN- 
DUSTRY IN  THE  UNITED  STATES.  By  Arthur  E.  Suf- 
fern. 

THE  CANADIAN  IRON  AND  STEEL  INDUSTRY.  By  W.  J. 
A.  Donald. 

THE  TIN   PLATE  INDUSTRY.     By  D.  E.  Dunbar. 

THE  MEANS  AND  METHODS  OF  AGRICULTURAL  EDU- 
CATION.    By  Albert  H.  Leake. 

THE  TAXATION   OF   LAND  VALUE.     By  Yetta  Scheftel. 

RAILROAD  VALUATION.     By  Homer  Bews  Vanderblue. 

RAILWAY  RATES  AND  THE  CANADIAN  RAILWAY  COM- 
MISSION.    By  D.  A.  MacGibbon. 

THE  CHICAGO  PRODUCE  MARKET.  By  Edwin  Griswold 
Nourse. 

THE  ARBITRAL  DETERMINATION  OF  RAILWAY  WAGES. 
By  J.  Noble  Stockett. 

THE  RESULTS  OF  MUNICIPAL  ELECTRIC  LIGHTING 
IN    MASSACHUSETTS.     By  Edmond  Earle  Lincoln. 


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